Newsom AI order puts employers on notice

Gov. Gavin Newsom signed an executive order directing California agencies to prepare for job losses and economic disruption caused by artificial intelligence.

Labor attorneys say there are few immediate implications for employers. Instead, the document sets a roadmap for where the state might be heading on AI-related labor policy. The announcement Thursday morning also came as President Donald Trump abruptly canceled a news conference where he was expected to sign his own executive order on AI.

Executive Order N-6-26 came two days after Newsom told an audience at a Center for American Progress event in Washington, D.C., that California must prepare workers for AI-driven disruption -- adding that aspects of the economic system must be "reimagined." He echoed those words in a news release Thursday morning.

"California has never sat back and watched as the future happened to us -- and we won't start now. ... This moment demands that we reimagine the entire system -- how we work, how we govern, how we prepare people for the future," he said.

The order sets deadlines for agencies to study how AI could affect workers, update job-training programs, track layoffs, and consider new protections for people displaced by technology.

"Essentially the executive order appears to be a mandate to various state agencies to undertake analyses and report back," said Elena Baca, who advises employers as the co-chair of the Paul Hastings Employment Law Department in Los Angeles. "There's no immediate action required of employers."

The order directs the Labor and Workforce Development Agency, the Governor's Office of Business and Economic Development, and the Department of Finance to report within 90 days on AI's potential labor-market effects, including disproportionate impacts on demographic groups and early warning signs of disruption. The labor agency would then use that information within 180 days to create a set of policy recommendations.

The governor's order is one of the clearest signs yet that policymakers are preparing for widespread labor disruption tied to advances in artificial intelligence. These concerns include potential mass layoffs affecting white-collar workers and government responses such as universal basic income.

"A lot of the AI proposed legislation or regulated actions in the employment space have been focused really on how AI tools are being used in the workplace, whether it's hiring decisions or termination decisions," said Scott P. Jang, a principal with Jackson Lewis P.C. in San Francisco. "I think this the first that I've seen in terms of how we are going to deal with the workers who are impacted and displaced by AI."

Such concerns are no longer theoretical, Jang added. Numerous recent studies and metrics show that AI is negatively affecting programming jobs, especially at the entry level.

"Rewind three to four years ago, software engineers were the hottest gigs in town," Jang said.

Joy C. Rosenquist, a shareholder with Littler Mendelson P.C. in Sacramento, said the state could be at the beginning of a significant reordering of labor law.

"These directions raise complex legal issues such as compliance with securities, wage-and-hour laws for equity-based compensation, the possibility of de facto severance mandates (altering at-will employment), and tensions between state policy and federal labor law if AI-related decisions become mandatory subjects of bargaining," she said in an email.

The order's most impactful provisions may involve seeking "recommendations on revisions and updates to the California Worker Adjustment and Retraining Notification (WARN) Act in a manner that is responsive to, and effectively provides early warning data on, emerging industry trends."

Signed in 2002, the law requires large employers to give at least 60 days' written notice before a mass layoff, plant closure, or major relocation. The law has found renewed relevance amid concerns that AI could trigger similar layoffs.

"To me, the most compelling aspect of the EO for California employers is the WARN implication," said Rosenquist. "It is a clear signal that the state may expand the WARN Act to address layoffs and workforce changes driven by AI and automation."

She added that the review "could lead to earlier notice requirements, broader definitions of triggering events, and more detailed disclosures about the role of AI in employment decisions."

Baca agreed.

"What will become complicated of course is understanding what is encompassed by the term AI, as well as understanding whether the job displacement was directly affected by the implementation of whatever technology falls within that definition," she said.

California Federation of Labor Unions President Lorena Gonzalez said Newsom's order provided "a little sliver of hope" in some areas. For instance, she pointed to language stating that AI use could be included in collective bargaining agreements.

But she also pointed to what she sees as a major flaw.

"His order starts with the assumption that we're going to have catastrophic job loss," Gonzalez said. "That is a political decision, because we can actually pass bills, and we have about 21 that are currently going through the Legislature, that would curb job loss by saying AI doesn't belong in certain areas."

Gonzalez also took aim at universal basic income. Elon Musk and Anthropic CEO Dario Amodei have raised the idea to cope with mass job loss. But Gonzalez asked, "Who is going to fund this" when billionaires and major corporations already "don't want to be taxed."

"We are desperately opposed to UBI," Gonzalez said. "We think there's dignity in work."