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California’s SB 947 changes how AI discipline and terminations are handled
The law, signed Sept. 30 and effective July 1, 2027, bars sole reliance on automated systems for discipline and termination decisions, requiring human corroboration and expanded notice rights for affected employees.
Insurance Business reports that California’s SB 947, signed by Gov. Gavin Newsom on Sept. 30 and dubbed the “No Robo Bosses Act,” is forcing brokers and insurers to rethink where liability sits when employers use third-party AI tools for disciplinary and termination decisions.
Beginning July 1, 2027, employers will be prohibited from relying solely on an automated decision system for those actions, and when an employer primarily relies on an automated output, a human must corroborate the decision. The legislation also grants affected employees additional notice and information rights.
Insurance Business also links the regulatory shift to ongoing litigation over AI-assisted recruitment, including Mobley v. Workday, in which plaintiffs allege Workday’s automated hiring tools led to discriminatory outcomes and are seeking class certification, with a March 2027 hearing scheduled. Workday has denied wrongdoing.
The outlet says the new uncertainty around liability risk is moving AI vendor contracts, human oversight, and potential exclusions higher on insurers’ underwriting agendas, according to Jonathan Mitchell, financial practice lead at Founder Shield, the innovation practice of The Baldwin Group.