Mediator’s Minute: California’s AI Regulations for Employers and Newsom’s Veto

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As has been widely reported, in absence of comprehensive federal legislation, all 50 states have taken up the mantle and are introducing—and passing—legislation to regulate AI in their respective jurisdictions. Here in California there have been myriad proposals wending their way through the legislature, and state and local agencies have been active as well. 

On October 13, 2025, Governor Newsom vetoed SB-7, which would have amended the California Labor Code to impose responsibilities on employers who use “Automated Decision Systems” or ADS.  If this sounds familiar, that is because the Fair Employment & Housing Council issued its own rulemaking addressing ADS from the perspective of employment discrimination which became effective on October 1, 2025.  See 2 CCR § 11008.  For employers covered by it, the California Privacy Protection Act (CPPA) also addresses what it now defines as “Automated Decisionmaking Technology” or ADMT.  See Cal. Civ. Code § 1798.100 et seq., as amended (copies of the notice of approval and final rule are available at https://cppa.ca.gov/regulations/ccpa_updates.html).

The drafters of SB-7 had attempted to address the potential for confusion or inconsistency with the inclusion of section 1536, which stated “Except as set forth in Section 1537, an employer who complies with the requirements related to notice under this part is not required to comply with any substantially similar notice provisions related to automated decision systems used for employment-related decisions required under any other state law” and section 1537, which stated “Notwithstanding Section 1536, an employer that is a business subject to the California Consumer Privacy Act of 2018 [citation omitted] is subject to any privacy-related automated decisionmaking technology regulation duly adopted by the California Privacy Protection Agency pursuant to Section 1798.185 and subdivision (b) of Section 1798.199.40 of the Civil Code.”  Proposed Cal. Lab. Code §§1536-37 (emphasis added).  There was also a carveout for those covered by certain collective bargaining agreements.  Id. at §1538.  SB-7 carried with it a $500 civil penalty, along with the potential for punitive damages and attorney fees and costs.  Proposed Cal. Lab. Code §1532(c-d).  

While SB-7 was defeated, organizations are increasingly subject to a multitude of AI-related regulations, whether in the employment, privacy, consumer, or intellectual property space.  Overlapping regulations have the potential to create ambiguities that then must play out either in litigation, amendments to legislation, or both.  Over time, the disparities among the states’ regulations may force the federal government (or a conglomeration of states?) to act to bring clarity and consistency to this complex regulatory space.  

Shireen Wetmore is a mediator specializing in employment matters and can be reached for questions, comment, or booking at www.shireenwetmoremediation.com.

This Mediator’s Minute is for informational purposes only and does not constitute legal advice.