Question: I’m a small business owner and have used AI to do certain tasks I would previously have given to staff and make my business more efficient. I heard, however, that the Governor issued an order that limits how much employers can use AI to take over tasks that used to be performed by people. Is that true?
Answer: No. The Governor has not issued an order that restricts how employers can use AI in the workplace. However, the Governor did issue an executive order recently that addresses how AI will, in the near future, disrupt the labor market.
On May 21, 2026, Governor Newsom issued a “first-in-the-nation” executive order aimed at preparing California employees, businesses, and the broader public for the potential labor market disruption associated with the ever-growing adoption of artificial intelligence. Titled Executive Order N-6-26 (the “Order”), the Order previews the State’s forthcoming policy goals for AI regulation, as well as potential enforcement efforts.
The Order begins by outlining the current state of AI development, as well as the State’s current efforts to foster job growth and workforce development, such as job training opportunities. The Order then announces that the State intends to “take proactive steps to manage and mitigate” AI’s potential disruptions to the workforce, education, and the economy.
To that end, the Order directs state agencies to study and collect data on AI’s impact on the California labor market. The Order requires that, within 180 days, the California Labor and Workforce Development Agency recommend revisions to the California Worker Adjustment and Retraining Notification (Cal-WARN) Act to make the Act more responsive to AI developments. These recommendations would result in changes to California’s layoff notice requirements related to AI-driven workforce shifts. Notably, two other states (Connecticut and New York) have adopted similar revisions to their WARN acts which require employers to notify the state of layoffs related to the adoption of AI. And currently, there is a similar bill (Senate Bill 951) pending in the California Legislature.
The Order also creates new information-gathering requirements for state agencies. For example, the Order tasks the LWDA with reviewing policies that provide discharged employees with safety-new protections, including severance policies and temporary work programs. The LWDA’s safety-net review may foreshadow State-specific proposals that create new benefits for workers displaced by AI, such as mandatory severance programs.
Moreover, the Order requires the LWDA to review how collective bargaining agreements—and the union bargaining process more broadly—are addressing AI’s impact on employees. Finally, the Order requires the California Employment Development Department to launch a dashboard that shows AI’s “impacts on employment across various sectors.” This includes a directive to EDD to gather and report feedback from businesses about their adoption of AI into hiring and workforce decisions.
Overall, the Order does not create any new obligations for California employers. However, it does serve as a roadmap for the State’s policy goals with respect to AI regulation. Importantly, the Order also hints at areas where the State will likely create new regulations, which do impact employers, in the near future. Employers should continue to monitor regulatory developments at the state level and, when in doubt, contact their employment counsel for guidance on the impact of any new regulations.