California Employers: 10 Employment Law Changes to Prepare for in 2027
California employers face another round of significant employment-law changes in 2027, affecting everything from artificial intelligence and workplace surveillance to employee leave, arbitration agreements, and wage-and-hour enforcement.
Most of these laws take effect January 1, 2027, although some have different effective dates. Here are ten important developments employers should know about.
1. No Robo Bosses: Restrictions on AI Employment Decisions (SB 947)
Beginning July 1, 2027, SB 947, commonly referred to as the No Robo Bosses Act [officially captioned, “Employment: automated decision systems”], prohibits employers from relying solely on automated decision systems to discipline or terminate employees. When an employer primarily relies on an automated recommendation, a human reviewer must corroborate the decision, and the employer must provide the affected employee with written notice and access to certain information.
Employers using AI-assisted performance management, disciplinary, or termination systems should review their practices before the law takes effect.
2. AI-Related Layoffs Trigger Additional Notice Requirements (SB 951)
Beginning January 1, 2027, employers conducting mass layoffs (50 or more employees in any 30-day period), terminations, or relocations covered by California’s Worker Adjustment and Retraining Notification (WARN) Act must provide additional disclosures when those actions result substantially from AI or other automated technology replacing employees.
Cal-WARN generally applies to workplaces that employ, or have employed within the preceding 12 months, 75 or more employees. It requires 60 days’ advance notice of layoffs involving 50 or more employees within a 30-day period, as well as certain workplace closures and relocations.
Under SB 951, employers must additionally identify the affected positions, job functions being automated, and type of technology involved. Employers contemplating AI-related workforce reductions should assess their Cal-WARN obligations early and update their notice procedures accordingly.
3. New Restrictions on Workplace Surveillance (AB 1331 and AB 1883)
Beginning January 1, 2027, two new laws restrict California employers’ use of workplace surveillance technologies.
AB 1331 generally prohibits employers from monitoring employees in workplace bathrooms through cameras, audio devices, or other surveillance tools. Employees also have the right to leave portable monitoring devices outside workplace bathrooms, subject to certain exceptions. For health-and-safety purposes, an employer may use a workplace-surveillance tool to confirm a particular entry into and exit from a workplace bathroom, but it may not use that exception to monitor activity inside the bathroom or track how frequently an employee uses it.
AB 1883 prohibits employers from using AI-powered surveillance tools to recognize or predict employees’ emotional states or collect neural data, such as information obtained by measuring nervous-system activity. Certain exceptions apply, including for tools used to ensure safety.
Employers should review their workplace surveillance policies, monitoring devices, and third-party software to identify potentially prohibited practices. Violations of either law may result in civil penalties of up to $500 per violation.
4. California Revises Its Stay-or-Pay Restrictions (AB 1697)
Last year, California enacted legislation generally prohibiting employment agreements requiring workers to repay certain bonuses, training costs, or other expenses upon termination.
AB 1697, effective immediately upon its enactment on September 30, 2026, provides all employers with an additional year to structure their employment contracts free of debt traps or quit fees by postponing application of these restrictions to agreements entered into on or after January 1, 2027. The amendment also expands certain exceptions, including for qualifying retention bonuses and advanced paid time off.
Employers should review employment agreements containing repayment provisions before the revised restrictions apply.
As Workplace Legal previously reported*, these restrictions can affect a variety of employment-related agreements.
*Workplace Legal’s November 2025 article discussed the original January 1, 2026 applicability date. AB 1697 subsequently changed that date to January 1, 2027.
5. Changes to Employment Arbitration Agreements (AB 2155)
Beginning January 1, 2027, AB 2155 provides that arbitration agreements unenforceable under the Federal Arbitration Act (FAA) are also unenforceable under California’s Arbitration Act, even if the agreement does not expressly invoke the FAA.
The change is particularly relevant to certain transportation workers and disputes involving sexual harassment or sexual assault. Employers should review their arbitration agreements to determine whether any federal exclusions affect their enforceability.
6. Bereavement Leave Expands to Include Chosen Family (SB 1149)
Beginning January 1, 2027, California employers with five or more employees must provide eligible employees up to five days of bereavement leave following the death of a designated person, including someone whose relationship with the employee is equivalent to a family relationship.
Employees may identify their designated person when requesting leave, although employers may limit employees to one designated person per 12-month period. Employees qualify for bereavement leave after just 30 days of employment, and the leave generally may be unpaid unless the employer’s policy provides otherwise.
Employers should update their bereavement-leave policies and ensure managers understand the expanded definition of family member and applicable leave requirements.
7. Expanded Pay-Data Reporting Categories and Higher Penalties (SB 464 and SB 1237)
Beginning January 1, 2027, covered California employers will face expanded pay-data reporting requirements and substantially higher penalties for repeated failures to file required reports.
California’s pay-data reporting requirements generally apply to private employers with 100 or more payroll employees and to private client employers with 100 or more workers supplied by labor contractors. According to the California Civil Rights Department’s reporting guidance, the applicable 100-employee threshold includes employees working inside and outside California, provided at least one employee in the relevant group works in California. The payroll-employee and labor-contractor-employee thresholds are calculated separately.
An employer generally meets a threshold if it has 100 or more employees in the relevant group during a selected pay period between October 1 and December 31, known as the snapshot period, or employs 100 or more of those employees on a regular basis during the reporting year. An employer with fewer than 100 employees may also be covered if they are sufficiently integrated with affiliated businesses that collectively employ 100 or more employees.
SB 464 increases from 10 to 23 the number of job categories for which covered employers must report employee pay and demographic information. The new categories become operative January 1, 2027. Because Government Code section 12999 requires annual reports to be filed by the second Wednesday of May and to cover the preceding calendar year, the first report using the 23 categories will be due May 12, 2027 and will cover 2026 pay data.
SB 464 also requires employers and labor contractors to collect and store demographic information gathered for pay-data reporting separately from employees’ personnel records.
Separately, SB 1237 increases the maximum penalty for a subsequent failure to file a required report from $200 to $1,000 per employee. The maximum penalty for an initial failure remains $100 per employee. These penalties are imposed by a court upon the Civil Rights Department’s request; they are not automatically assessed merely because a report is late.
Employers should determine whether they meet either reporting threshold, evaluate whether affiliated entities constitute an integrated enterprise, begin mapping 2026 positions to the 23 job categories, and confirm that reporting-related demographic information is maintained separately from personnel files.
8. Expanded Protections Against Immigration-Related Retaliation (AB 2495)
Beginning January 1, 2027, AB 2495 expands California’s protections against immigration-related retaliation and intimidation. The law prohibits employers from using immigration-related threats or other coercive conduct to retaliate against employees or discourage them from exercising workplace rights in the first place.
Prohibited practices include requesting more or different employment-authorization documents than federal law requires; refusing to honor documents that reasonably appear genuine on their face; using E-Verify at an unauthorized time or in an unauthorized manner; threatening to file or filing a false report with law enforcement or another government agency; and threatening to contact or contacting immigration authorities. These practices violate the statute when undertaken for a prohibited retaliatory purpose.
Violations may result in civil penalties of up to $10,000 per affected person per violation, as well as attorney’s fees and potential suspension of business licenses. Violations occurring within 90 days after protected activity may trigger a rebuttable presumption of retaliation.
Employers should train managers to avoid immigration-related threats or intimidation, review employment verification procedures, and ensure employees can raise workplace concerns without fear of retaliation.
9. Expanded Workplace Violence Restraining Orders (AB 1961)
Beginning January 1, 2027, AB 1961 allows employers to seek workplace violence restraining orders protecting an entire workplace when harassment, violence, or credible threats are directed at that location rather than a particular employee.
Previously, employers generally needed to identify an individual employee requiring protection. The new law gives employers an additional tool for addressing threats directed at their workplace or workforce.
Looking ahead, beginning January 1, 2028, AB 2179 will permit electronic filing of restraining-order petitions and remote appearances at hearings, making these proceedings more accessible to employers.
10. Wage-and-Hour and Worker-Classification Enforcement (SB 1316 and SB 1444)
Beginning January 1, 2027, SB 1316 strengthens the Labor Commissioner’s authority to investigate wage-and-hour violations and enforce unpaid wage awards.
The law expands existing restrictions that may prevent employers from using payroll, timekeeping, and other employment records as evidence when contesting certain Labor Commissioner citations if they failed to timely produce those records in response to a properly served request. These restrictions now extend to certain retaliation and discrimination proceedings, as well as public works contractors and subcontractors challenging wage assessments.
SB 1316 also allows the Labor Commissioner to renew liens against employers’ real property for unpaid final wage awards for additional ten-year periods at any time prior to the lien’s expiration, potentially extending the Commissioner’s ability to collect outstanding amounts.
SB 1444 separately expands remedies for workers willfully misclassified as independent contractors by allowing them to recover existing statutory penalties through Labor Commissioner wage-claim proceedings. Although the law does not increase the penalties themselves, they are substantial: $5,000 to $15,000 per violation, increasing to $10,000 to $25,000 per violation where an employer engages in a pattern or practice of willful misclassification. These penalties are in addition to potential liability for unpaid wages, overtime, and expense reimbursements.
Employers should ensure that payroll and employment records are accurate, readily accessible, and promptly produced when requested by the Labor Commissioner. They should also review independent-contractor arrangements under California’s ABC test or other applicable classification standards, recognizing that simply labeling a worker an independent contractor does not establish their legal classification.
What Should California Employers Do Now?
With these changes approaching, California employers should begin reviewing their employment practices before the new requirements take effect. Depending on their operations, this may include evaluating AI-assisted personnel decisions and workplace surveillance systems, updating employment agreements and employee handbooks, reviewing worker classifications, and confirming compliance with pay-data reporting and wage-and-hour recordkeeping requirements.
Employers should also prepare for the statewide minimum wage increase to $17.40 per hour on January 1, 2027, as discussed in Workplace Legal’s recent minimum-wage article.
Even inadvertent compliance errors can expose employers to significant liability. If you have questions about how these new laws affect your business, contact Workplace Legal. We can help identify potential compliance issues and update your employment policies, agreements, and practices before they become costly problems.
