U.S. States Seek to Regulate “Robo Bosses”

By George Waggott, founder, and Roberto Fonseca-Velazquez, Articling student

George Waggott Law

A series of recent articles published by Fortune magazine have highlighted the proposed California “No Robo Bosses” Act, which aims to regulate employer use of artificial intelligence (AI) to make management decisions.

AI is becoming deeply integrated into the modern workplace, influencing everything from hiring decisions to employee evaluations. However, concerns about the unchecked power of AI over human workers have led to calls for legislative action. The newly proposed “No Robo Bosses” Act (Bill SB 7) was introduced by California Assembly members Sade Elhawary and Isaac Bryan and supported by State Senator Jerry McNerny. The Bill has gained strong backing from organized labour and other pro-employee groups, including the California Federation of Labor Unions.

The Bill’s primary stated goal is to ensure human oversight in critical employment decisions. If passed into law, the legislation would mandate that AI cannot be the sole authority in matters such as promotions, demotions, terminations, or disciplinary actions. Additionally, the Bill would prohibit large language models (LLMs) and other AI systems from accessing sensitive personal information about employees, such as immigration status, religious beliefs, or medical history. The legislation also bans the use of AI to predict future employee behaviour if such predictions could lead to negative consequences for the worker.

A recent survey by Resume Builder reports that 60% of managers are using AI to make decisions about their direct reports. Among them, 78% of the managers surveyed say that they use AI to determine raises, 77% for promotions, 66% for layoffs, and 64% for terminations.

These statistics may be reason for concern given the lack of training among these managers. Only 32% of employees say that they have received formal training on how to ethically use AI in managing people, while 24% admit that they have had no training at all. Beyond ethical concerns, such extensive use of AI could raise legal issues and related risks that managers are not prepared to deal with.

California is not alone in its regulatory efforts – more than 30 U.S. states are currently exploring similar legislation. Colorado, for instance, passed a law in 2024 that targets algorithmic discrimination in the workplace. Set to take effect in 2026, Colorado’s law focuses on so-called “high-risk” AI systems that influence major employment decisions. The Colorado law requires employers to conduct annual impact assessments, notify employees when such systems are in use, and provide a mechanism for workers to appeal decisions influenced by AI.

Though other U.S. jurisdictions have already passed laws to regulate AI, several legal commentators view the California Bill as groundbreaking. Luana De Mello, assistant general counsel and HR consultant at Engage PEO, describes California legislation as a first-of-its-kind law that will require businesses to conduct regular audits of their AI systems and ensure transparency and compliance with state regulations. This would mean that companies will need to take a closer look at how their AI tools function and how decisions are made, potentially leading to significant operational changes.

Despite these state-level efforts, there is uncertainty about the future of AI regulation at the U.S. at federal level. A proposed 10-year moratorium on state-level AI regulations was initially included in a major federal budget bill but was recently removed. This leaves the future of AI governance in the hands of individual states, potentially leading to a patchwork of regulations across the country.

Some legal professionals warn that California’s Bill could impose significant costs on businesses. Jason Murtagh, an attorney in San Diego, notes that companies may need to audit their AI tools, revise internal policies, and prepare for increased litigation from employees and job applicants. Smaller businesses, in particular, may struggle with compliance due to limited resources. Spencer Hamer, an attorney in Irvine, California emphasizes that while large corporations may more easily manage the legal burden, smaller companies could find the increase in employment-related litigation difficult to manage.

Some observers see the California Bill as a natural extension of existing best practices. Angelina Evans, an attorney in Los Angeles, has long advised clients to establish AI governance teams to monitor data accuracy and fairness. She believes the bill promotes transparency and protects workers who may not even realize their rights are being violated.

Additional legislation impact organizations and workplaces is bound to continue to be both proposed and adopted. With ongoing and widespread adoption of AI tools and related changes to organizations, that calls for relevant laws is bound to continue across jurisdictions. What remains particularly unclear is how extensive new regulations will be, and whether or not there will be any level of consistency across the globe.

For more information about George Waggott Law, please see: www.georgewaggott.com, or contact: george@georgewaggott.com