California Lawmakers Scrutinize Employers' Use of Surveillance, Automated Decisions

At a meeting Wednesday, the Assembly Labor Committee voted 5-0 for both SB-238, which would require employers to report yearly on workplace surveillance tools they use (see 2506040035), and SB-7, which would regulate automated decision systems (ADS) in the workplace (see 2505220051). Both bills passed the California Senate earlier this month by 27-10 votes and will go next to the Assembly Privacy Committee.

Earlier that day, a Senate committee voted 4-1 to clear a workplace surveillance bill (AB-1331) despite business concerns about safety and violence (see 2506250050). That bill, previously passed 55-15 in the Assembly, will go next to the Senate Judiciary Committee.

SB-238 would be “a meaningful step toward promoting transparency, accountability and fairness in the artificial intelligence monitoring systems across California,” said Sen. Lola Smallwood-Cuevas (D), the bill's sponsor, at the Assembly Labor Committee hearing. “This bill ensures individuals are clearly informed when and how AI systems are used to monitor them, giving people the right to know when algorithms influence decisions about job performance, hiring and access to services.”

“Surveillance is no longer limited to cameras,” said Smallwood-Cuevas. “Today's companies are using wearable technologies like sensor-equipped ID badges that collect data on location, voice tone, body temperature and even bathroom frequency. These systems are expanding in ways that disproportionately impact communities of color, low-income workers and students.”

However, SB-238 wouldn’t limit employers’ ability to maintain a safe workplace and monitor for theft and misconduct, she said.

The California Labor Federation testified in support of the bill. “Workers simply do not have adequate awareness of what tools are used in the workplace. Awareness and transparency are vital for a safe and productive workplace,” said the group’s lobbyist, Ivan Fernandez.

But the California Credit Union League raised concerns that the legislation could undermine security. “Our financial institutions operate under a constant threat of criminal activity and cyberattacks,” said Emily Udell, a policy advocate at the league. “We're concerned about the breadth of notice requirements in the bill [and] about the use of internal security and monitoring practices being made publicly available.” That could “provide a road map for bad actors to potentially defraud the organization and exploit any vulnerabilities by gaining information on how to hack those systems.”

Businesses in other sectors share credit unions’ concerns, testified Ashley Hoffman, senior policy advocate for the California Chamber of Commerce (CalChamber).

Smallwood-Cuevas pushed back on industry’s security concerns. “This bill really requires just a general description,” she said. “It does not reveal source codes or passwords, technical architecture [or] operational workflow that would in any way compromise cybersecurity and any of the proprietary concerns that that have been raised.”

Discussing his bill on ADS in the workplace, Sen. Jerry McNerney (D) said SB-7 would create “common-sense guardrails,” such as requiring employees to notify applicants and workers before using ADS in employment decisions. Also, it would ensure “there's a human being in the loop for discipline and termination decisions.”

“We’ve made amendments to address some of the concerns,” including removing software distributors from the bill, narrowing its scope to employers who use the technology, he said. In addition, it now focuses on discipline or termination decisions, he said.

Bill supporters, including the California Labor Federation and the International Brotherhood of Teamsters, said it will protect workers. However, groups representing employers -- including CalChamber and the Society for Human Resource Management -- raised concerns that it could be too burdensome for businesses.