Your Software Scores Your Team. What Did California Just Change About Using It to Discipline or Fire Someone?

Your company uses software that scores, ranks or flags employees: a productivity score, a performance rating, an attendance flag. A manager looks at the output and decides what to do. California has now passed a law about what has to happen between that output and a decision to discipline or terminate someone.

The law is SB 947, approved September 30, 2026. This post walks through what the statute says, in its own words, when it starts, and the process questions a California employer can settle before it does. It is written for founders and managers at companies with California employees.

The short answer

SB 947 adds a new part to the California Labor Code, Part 5.5.5, "Automated Decision Systems in the Workplace."¹ Its last operative section says: "This part shall become operative on July 1, 2027."¹

In summary, the part does four things:

1. It limits how an employer may use an automated decision system in a disciplinary or termination decision, including a human-corroboration step.
2. It gives an affected employee a written notice and a right to request a description of their own data used by the system.
3. It prohibits retaliation against an employee who uses these rights.
4. It sets out enforcement, including a civil penalty per violation.

The sections below take each one in order, and the last section lists questions to settle before the start date.

What counts as an "automated decision system"

The statute defines the term in section 1520(c): "any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons."¹

It then lists what is not covered: "a spam email filter, firewall, antivirus software, identity and access management tools, calculator, database, dataset, or other compilation of data."¹

"ADS output" is defined to include "any information, data, assumptions, predictions, scoring, recommendations, decisions, or conclusions generated by an ADS."¹

Whether a particular tool fits that definition depends on what the tool does and how it is used. This post does not answer it for any tool.

Discipline and termination: what the statute says

Section 1522 is the core. In its words:

• No sole reliance. "An employer shall not rely solely on an ADS when making a disciplinary or termination decision."¹
• A human corroborates. "If an employer primarily relies upon an ADS output to make a disciplinary or termination decision, the employer shall direct a human to corroborate the decision using data that was collected or used to produce the ADS output or other relevant corroborating or supporting information."¹ The section says that supporting information "may include, but is not limited to": supervisory or managerial evaluations, personnel files, work product of employees, peer reviews, and witness interviews, which "may include relevant online customer reviews."¹
• When the output cannot be used. "If an employer cannot corroborate the ADS output, or the human reviewer has concluded that the ADS output is inaccurate, incomplete, or misleading, the employer shall not use the ADS output to make a disciplinary or termination decision."¹
• Other prohibited uses. Section 1522(a) also prohibits using an ADS to prevent compliance with or violate federal, state or local labor, occupational health and safety, employment or civil-rights laws or regulations; infer an employee's protected status under Government Code section 12940; or predict and take adverse action against a worker for exercising legal rights, including rights under state and federal employment and labor law.¹

The employee's notice and right to a description

Two provisions give the affected employee something in writing.

• A description of their data. "An employee shall have the right to request, and an employer shall provide, a meaningful, objective description of the employee's own data used by the ADS when an employer has primarily used an ADS to make a disciplinary or termination decision." The description must be provided "in a manner that anonymizes the customer's, other employee's, or individual's personal information."¹
• A postuse notice. An employer that "primarily relied upon an ADS to make a disciplinary or termination decision" must give the employee "a written postuse notice at the time the employer informs the employee of the decision." The notice must be "written in plain language as a separate, stand-alone communication," in "the language in which routine communications and other information are provided to employees," and delivered by "a simple and easy-to-use method, including an email, hyperlink, or other written format."¹
• What the notice says. Section 1524(b) lists four items: that the employer primarily relied upon an ADS to make the decision; that a human reviewed the decision and corroborated the ADS output; contact information for a human the employee may contact about the decision and about the right to the data description; and that the employer is prohibited from retaliating for exercising rights under the part.¹

Retaliation and enforcement

Section 1526 bars an employer from discharging, threatening to discharge, demoting, suspending, or otherwise discriminating or retaliating against an employee for using or attempting to use rights under the part, filing a complaint with the Labor Commissioner, or cooperating in an investigation.¹

On enforcement, section 1526.1 says the Labor Commissioner may enforce the part, including by issuing a citation, and that a public prosecutor may also enforce it. It provides: "An employer who violates this part shall be subject to a civil penalty of five hundred dollars ($500) per violation."¹

Section 1526.1(c) addresses the burden in a civil action or administrative proceeding brought under this part for a violation of section 1522(b) or (c). In that setting, once ADS use in a disciplinary or deactivation decision has been demonstrated, the employer must demonstrate either that it did not primarily rely on an ADS or that it complied with sections 1522 and 1524 when making the disciplinary or termination decision.¹

Who it reaches, and what it leaves alone

• Employers. Section 1520 defines "employer" as "a person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person." It defines "employee" as "any person employed by an employer," and "employ" as "to engage, suffer, or permit to work."¹ Whether a particular worker is covered is a question for a lawyer on the facts. For how California classifies workers, see our post on employee or contractor classification.
• Local rules. The part "does not preempt any city, county, or city and county ordinance that provides equal or greater protection to employees who are covered by this part."¹
• Privacy regulations. Subject to section 1526.4, an employer that complies with this part's notice requirements need not comply with substantially similar notice provisions under other state law relating to automated decision systems used for employment-related decisions. This notice relief does not apply to quotas as defined in section 2100 or other automated standards applied to employees' working conditions. An employer that is a business subject to the California Consumer Privacy Act remains subject to privacy-related automated decisionmaking technology regulations duly adopted by the California Privacy Protection Agency under the authority identified in section 1526.4.¹ Our post on AI in hiring in California and Texas covers the privacy and civil-rights rules on the hiring side.
• Two exceptions. Under section 1526.5, the part does not apply to parties covered by a collective bargaining agreement that clearly and unambiguously waives the part, expressly addresses wages or earnings, working conditions and other terms and conditions of work, and provides protection from algorithmic management. Under section 1526.6, the part does not apply to ADS use to the extent required by or reasonably necessary to comply with a federal statute, federal regulation or binding federal contract relating to aircraft development for use in the national airspace, or development of products or services for national security, military, space or defense purposes. The latter exception applies only to the operations covered by that federal requirement or contract.¹

Seven questions to settle before July 1, 2027

None of these is a legal conclusion. Each is a process question a California employer can answer now.

1. Which tools are in the picture? Make a list of the software that issues a score, classification or recommendation about employees: performance, productivity, attendance, quality. Then ask, for each one, whether the output is used to assist or replace a manager's decision. See our AI vendor contract questions for what to ask a vendor.
2. Who is the human? If the employer primarily relies on an ADS output to make a disciplinary or termination decision, who corroborates the decision, and what information do they use? The statute lists examples of supporting information; which of those exist at your company?
3. What do you record? Because the burden language in section 1526.1 turns on what the employer can demonstrate, consider what a record of the corroboration would show, and where it lives.
4. What does the notice look like? The statute describes a separate, plain-language written notice at the time of the decision, in the language the company uses for routine communications. Who sends it, and from what template?
5. How does an employee ask for their data? Who receives the request, what does a "meaningful, objective description" look like for each tool, and how are other people's personal information anonymized?
6. Can the vendor help? Does your contract give you the data and the output details you would need to corroborate a decision or describe an employee's data? See our AI governance contracts post.
7. Do your policies match? A workplace AI use policy, the employee handbook and manager training may all need to reflect the new process, including the rule against retaliation.

What this post does not cover

This post does not address hiring and promotion tools, other California workplace AI laws or regulations, other states' laws, or how an agency or court might interpret these provisions. It also does not determine whether a particular tool, decision or worker is covered; those questions require a separate review of the relevant facts and law. The only authority cited here is SB 947. For the broader picture, see our AI governance guide for business and our overview of California business law changes for 2026.

How we can help

Accord & Shield Legal drafts and reviews employment policies, handbooks and AI-related contract terms for technology companies in Arizona, California and Texas. To better understand the scope of your matter, you can schedule an initial consultation.

This article is general information, not legal advice. Reading it does not create an attorney-client relationship. How any of these points applies to your company depends on your tools, your workforce and your facts; consult an attorney about your situation.