Colorado was the first state to pass legislation around AI at work, focused on algorithmic fairness, annual impact assessments, and worker rights. And California joined the fray earlier this year when State Sen. Jerry McNerny introduced the “No Robo Bosses” Act. 

California’s bill would require human oversight when it comes to promoting, demoting, disciplining, or firing workers. It would also protect personal employee information like religion and health care history, and prevent employers from using AI to protect worker actions that would result in a negative outcome against them. 

“The act will be a first-of-its-kind as it places significant restrictions on the use of AI in the workplace,” Luana de Mello, assistant general counsel and HR consultant with Engage PEO, tells Fortune. “This will require businesses to take a closer look at their AI systems, including regular audits, and to ensure they are using these systems transparently and in compliance with state regulations.”

Although AI has been tantalizing for business owners with its promise of major productivity gains, the potential pitfalls are real. A recent survey found that around 60% of managers rely on AI to make choices about their direct reports. Of that group, managers are using the technology to determine raises (78%), promotions (77%), layoffs (66%), and even terminations (64%). 

“The purpose of these laws really is to provide transparency,” says Angelina Evans, an attorney at Seyfarth Shaw’s Los Angeles office. “And [protect] the people that might have their rights have been violated, and they’re not even aware of it.” 

You can read about the California bill and what it means for employers here. 

CHRO Daily will be taking a break tomorrow for the Independence Day holiday. We’ll be back in your inbox Monday, July 7.

Brit Morse
brit.morse@fortune.com

Around the Table

A round-up of the most important HR headlines.

Job growth is expected to fall this year but that doesn’t mean that companies in certain industries aren’t desperate for workers. New York Times

Here is what people, especially business owners, should know about what is and isn’t illegal when ICE makes an arrest at a workplace. Washington Post

Trump said trade deals with nations would be easy, but some are reaching contentious territory as the deadline approaches. Wall Street Journal

Watercooler

Everything you need to know from Fortune.

Job loss. Private sector hiring unexpectedly contracted in June, ADP says, a possible sign that the economy may not be as sturdy as in recent months. –Nino Paoli

More AI disruption. Microsoft announced today it will cut approximately 9,000 jobs in its largest round of layoffs since 2023. —Jim Edwards

Rethinking benefits. As some companies double down on unlimited PTO, the boss of an $11 billion fintech company has just axed the policy altogether. —Preston Fore