Articles Discussing General Workplace Issues in California.

The purchase or sale of a business in California involves intricate legal considerations, particularly regarding the rights of and responsibilities to

By: The “No Robo Bosses” Act (SB 7): How California’s New Bill Targeted at AI Could Impact the Workplace

The newly introduced “No Robo Bosses Act” seeks to regulate the use of AI in the workplace and prevent automated decision-making processes in employment decisions. For employers, understanding the implications of this bill is essential to maintaining compliance and minimizing legal risks, especially as AI becomes increasingly integrated into workplace practices. If enacted, SB 7 would have an immediate impact on employers using AI for workforce management.

California State Sen. Jerry McNerney, who introduced the bill, helped set federal AI policy while he previously served in Congress, where he co-founded the Artificial Intelligence Caucus and authored the AI in Government Act. “Businesses are increasingly using AI to boost efficiency and productivity in the workplace. But there are currently no safeguards to prevent machines from unjustly or illegally impacting workers’ livelihoods and working conditions,” Sen. McNerney said. However, we noted that the California Civil Rights Division is currently considering similar regulations regarding automated decision-making systems (“ADS”). See our prior blog and the status of proposed regulations.

The bill seeks to stop California employers from relying solely on ADS for critical workplace decisions—like hirings, terminations, disciplinary actions, and promotions. Under SB 7, “worker” means any person who is a job applicant to, an employee of, or an independent contractor providing service to, or through, a business or a state or local governmental entity in any workplace. Therefore, it would apply to job applicants and independent contractors, not just employees.

The bill defines an ADS as any computational process that uses machine learning, statistical modeling, data analytics, or artificial intelligence to produce simplified outputs—such as a score, classification, or recommendation—that assist or replace human decision-making and materially impact individuals. However, common workplace technologies were omitted from the definition, such as spam email filters, firewalls, antivirus software, and identity management tools.

In terms of enforcement, SB 7 would prohibit an employer from discharging, threatening to discharge, demoting, suspending, or in any manner discriminating or retaliating against any worker for taking certain actions asserting their rights under this Act. In addition, it would require the Labor Commissioner to enforce its provisions and would authorize a public prosecutor or any worker who has suffered a violation or their representative to bring a civil action.

If the bill is signed into legislation, California employers would need to take steps to ensure compliance in several ways, including but not limited to:

1. Human Oversight Requirement: Employers would need to ensure that any employment decision influenced by AI also passes through meaningful human review. AI cannot be the sole source of employment-related decisions under SB 7.
2. Transparency: Employers would be required to notify employees, in writing, when AI tools are being used in decision-making processes. The bill would further require the employer to maintain a list of all ADS currently in use and would require the notice to include the updated list. This could necessitate revising employee handbooks and updating onboarding procedures to include AI usage disclosures.
3. Data Privacy: Employers must ensure that data used in AI-decision making is handled responsibly and securely.
4. Predictive Behavior Analysis: If AI-driven decisions result in disparate impacts on protected classes, employers could face discrimination claims. Implementing robust auditing processes of ADS and conducting regular bias testing will be essential to mitigate this risk.
5. An ADS cannot obtain or infer information about an employee’s immigration status, ancestral history, health history, credit history, or other statuses protected by state law: Employers would need to implement protections in their ADS in this regard.
6. Enhanced Training for Employees: Employers may consider additional specific training on AI and provide procedures to oversee AI-driven decisions.
7. Appeals: Employees would have opportunity for appealing decisions made by an ADS. Employers would need to work on an appeals process.

As AI continues to gain traction across industries to improve efficiencies and reduce costs, it is important for California employers to proactively assess their current practices and implement safeguards if they use AI in employment decisions. CDF will monitor the status of the “No Robo Bosses” bill as it moves through the California legislative system.

By: PAGA Update: Key Lessons for Defending and Settling PAGA Cases

By: PAGA Update: Key Lessons for Defending and Settling PAGA Cases

Two recent Private Attorney General Act (PAGA) cases underscore the importance of effectively using procedural motions in defending such cases.

1.  Rodriguez v. Packers Sanitation Services LTD., LLC

The first case, Rodriguez v. Packers Sanitation Services LTD., LLC, involved the question of arbitrability in a so-called “headless” PAGA action. In a headless PAGA action, the plaintiff seeks to avoid arbitration by filing a complaint that asserts a PAGA claim solely on behalf of others while the PAGA plaintiff disclaims any individual claim for relief that would be subject to an arbitration.

In Rodriguez the California’s Fourth District Court of Appeal held that, in such cases, trial courts cannot order arbitration of the unasserted individual PAGA claims even if it is true that an individual PAGA claim is a necessary component of every PAGA action.

This decision is odds with the Second District Court of Appeal’s recently published decision in Leeper v. Shipt. In Leeper the appellate court held that trial courts may compel arbitration of unasserted individual PAGA claims because the court concluded that every PAGA action necessarily includes an individual PAGA claim. (For further analysis on Leeper see our prior blog post.)

The Rodriguez decision does not create a split of authority on the issue of whether every PAGA action includes an individual PAGA claim; the appellate court expressly declined to consider that issue. Instead, the Rodriguez decision concludes that trial courts resolving motions to compel arbitration must adopt the PAGA plaintiff’s representations about the scope of their PAGA claim.

However, the Rodriguez case will not necessarily lead to bad outcomes for California employers. In Rodriguez, the plaintiff represented to the appellate court that “he has forgone individual PAGA relief and [they] accepted that representation.” “As a result,” the appellate court found that he “will be precluded from taking a contrary position in the future” and the “conclusion that the complaint does not assert individual PAGA claims will be the law of the case.” In other words, the Rodriguez complaint will next be subject to a motion to dismiss for lack of standing.

Although the Rodriguez case will not necessarily lead to bad outcomes for California employers, it incorrectly places form over substance and will create waste. The appellate court should have given no credence to the plaintiff’s assertion that he has forgone relief under PAGA. It is well established that aggrieved employees cannot opt out of a PAGA settlement or judgment, and that a portion of any civil penalty award must be distributed to each aggrieved employee, including the plaintiff. Thus, PAGA does not allow aggrieved employees to forgo their share of a civil penalty award.

The Rodriguez decision also fails to recognize that, under Viking River v. Moriana and Adolph v. Uber, the arbitrable portion of a PAGA action is the threshold issue of whether the plaintiff is an aggrieved employee, not the ultimate issue of whether the court should award a civil penalty. Accordingly, where a PAGA plaintiff signed an agreement requiring arbitration of any claim, dispute, or controversy concerning alleged Labor Code violations, trial courts should order arbitration so long as the plaintiff claims that they are an aggrieved employee under PAGA—that they suffered a Labor Code violation. It should not matter that the plaintiff may claim to have “purely representative” PAGA claims and to have disavowed any “individual relief.”

The Rodriguez decision indicates that it would be prudent for employers to seek dismissal of headless PAGA actions as deficiently pled. However, that may be a trap for the unwary. If an employer seeks dismissal based on representations in the complaint that the plaintiff has no individual PAGA claim and is not seeking individual relief, the plaintiff will oppose the motion by relying on allegations that they are an aggrieved employee, which is sufficient to establish standing under PAGA. The plaintiff will win on that argument, and then claim the employer waived their right to enforce the arbitration agreement by litigating that dispute. Do not fall into this trap. Instead, consider filing a motion for dismissal of the headless PAGA action and, in the alternative, to compel arbitration.

2.  Moniz v. Adecco USA, Inc.

The second case, Moniz v. Adecco USA, Inc., involved a PAGA settlement between one employee (Moniz) and the employer. A second employee, Correa, who had filed a separate PAGA action with overlapping claims challenged the settlement leading to a series of appeals. Ultimately, the trial court approved the settlement, over Correa’s objections, denied Correa’s request for a service award and largely denied her request for an award of attorney’s fees. Unsurprisingly, Correa again appealed. Following the California Supreme Court’s decision in Turrieta v. Lyft Inc. the Moniz court concluded that Correa did not have standing to intervene, move to vacate, or appeal the judgment and settlement in Moniz’s separate PAGA action.

The Moniz court also rejected Correa’s arguments that she had personal interest sufficient to provide her standing to intervene and object to Moniz’s settlement. The “personal interests” asserted by Correa included: (1) bringing a PAGA claim, (2) collecting her share of 25% of recovered penalties, (3) collecting attorneys’ fees and costs, (4) a prevailing party determination that would protect her from any claim to pay the employer’s costs, and (5) collecting a service award. The Moniz court concluded that these “personal interests” arise from PAGA and are mostly derivative of her status as a representative of the state as a PAGA plaintiff and therefore were not sufficient to grant her standing considering the Supreme Court’s reasoning in Turrieta.

In light of Moniz, employers should strenuously oppose attempts by PAGA plaintiffs and their counsel to intervene, object, or oppose settlements in other PAGA cases with overlapping claims made with different employees.

These cases provide valuable insights for employers on the complexities of PAGA actions and the importance of staying informed about legal developments in this area to effectively manage compliance and litigation strategies. CDF will continue to monitor and report on such developments.