California employers have a new item for the AI compliance to-do list.  Assembly Bill 1883, recently signed into law by Governor Newsom and effective January 1, 2027, limits how employers can use artificial intelligence to monitor their workforce.

Specifically, AB 1883 bars employers from using AI-powered workplace surveillance tools to either make an inference or prediction about an employee’s emotional state, or collect an employee’s neural data, which is defined as “information that is generated by measuring the activity of an employee’s central or peripheral nervous system, and that is not inferred from nonneural information.”

In terms of what counts as a “workplace surveillance tool,” the definition is very broad. It covers any device (as opposed to direct human observation) that collects information about an employee’s activities or behaviors. Examples include video or audio surveillance, continuous time-tracking tools, geolocation, electromagnetic tracking, and photoelectronic tracking. Many ordinary workplace systems could therefore be implicated if they include an AI feature that reads emotions or captures neural data. The two exceptions to this law include using workplace surveillance tools for safety reasons and where federal law may require these tools in the development of aircraft or for products or services for national security, military, space, or defense purposes.

Violation of this law comes at a steep price. An employer found liable faces a civil or statutory penalty of up to $500 per violation, temporary or preliminary injunctive relief, and punitive damages. A prevailing party may also recover reasonable attorney’s fees and costs. What’s more, enforcement is not limited to the affected employee: the Labor Commissioner or a public prosecutor can also bring an action.

Given how soon this law goes into effect, employers should not waste any time adjusting the use of applicable tools, as applicable. Specifically, an employer should identify every device or software platform that monitors employees, including video and audio systems, time-tracking software, and geolocation tools. Employers should not forget add-on features, as an AI module may have been enabled. Any uncertainty regarding the use of such tools and whether that use would constitute a violation should be discussed with legal counsel.  With per-violation penalties, punitive damages, and multiple parties able to sue, a little diligence now is far less expensive than defending a claim later.

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