The EO, described as the first of its kind issued by a U.S. governor, mandates that state agencies work with academics, labor organizations, employer groups, and AI industry partners to study AI’s workforce impacts, modernize worker protections, expand training and upskilling programs, and explore mechanisms for sharing the economic benefits of AI more broadly with workers and the public.
Notably, the EO itself does not create binding statutory obligations, impose mandates on private employers, or establish private rights of action. Rather, it directs policy exploration and study by a broad set of state agencies and stakeholders over the coming months with the goal of informing future policymaking and regulation. The EO nonetheless represents the most comprehensive state-level executive action to date focused specifically on AI-driven workforce displacement, and it signals potentially significant regulatory changes ahead. Companies should expect closer scrutiny of AI-driven workplace changes.
The order’s directives
The EO’s principal directives include the following:
- Study of AI workforce impacts. Within 90 days, the Labor and Workforce Development Agency (“LWDA”), the Governor’s Office of Business and Economic Development (“GO-Biz”), and the Department of Finance must deliver a comprehensive review of academic research on AI’s potential workforce impacts, including disproportionate effects on demographic groups and best practices for early economic warning signals of future labor disruptions.
- AI employment impact dashboard. Within 90 days, the Employment Development Department (“EDD”) is directed to launch a public-facing dashboard showing AI’s impacts on employment across various sectors using Unemployment Insurance data, in consultation with leading AI labs that have published related data.
- Modernization of the California WARN Act. Within 180 days, LWDA must recommend updates to the California Worker Adjustment and Retraining Notification (“WARN”) Act to ensure it provides effective early warning data on emerging industry trends driven by AI and related technologies.
- Displaced worker safety net review. Within 180 days, LWDA must review safety net policies for displaced workers, including severance, equity-based compensation, and temporary subsidized employment programs such as CalWORKs/JobsNOW, and submit recommendations to strengthen these protections, with a comparative analysis of international practices. LWDA must also develop a workplan to expand awareness and enrollment in the underutilized Work Share program, an alternative to layoffs.
- Worker voice and collective bargaining. By October 15, 2026, LWDA must review how collective bargaining incorporates AI and new technologies, including worker voice in adopting emerging technologies, to identify lessons from unionized workplaces to inform broader policy.
- Workforce training and the AI playbook. By October 15, 2026, LWDA must review existing workforce training programs to ensure alignment with growing industries and professions. EDD, with local workforce development boards, must develop an “AI Playbook” to expand dislocated worker strategies for AI-exposed occupations and provide technical assistance on using Workforce Innovation and Opportunity Act resources for AI literacy programs. Institutions of higher education are requested to expand workforce readiness programs and integrate on-the-job training with degree offerings.
- Worker ownership and broad-based capital. GO-Biz and the Office of the Small Business Advocate (“CalOSBA”) are directed to evaluate opportunities to expand worker ownership models, including identifying regulatory barriers to employee-owned company structures, as a means of sharing AI productivity gains with workers. This aligns with the Governor’s stated interest in “universal basic capital” concepts, which would give residents stakes in assets such as corporate stocks, bonds, or wealth funds.
- AI for the public good. By October 15, 2026, the Government Operations Agency is directed to develop recommendations on incentive structures, potentially including public-private partnerships and voluntary or mandatory programs directing a portion of AI company revenue to beneficial AI deployments, to ensure AI development advances the public good rather than market incentives alone.
- Service opportunities and social services. LWDA, coordinating with the Governor’s Office of Service and Community Engagement, is directed to promote service opportunities for displaced workers through California Volunteers and the California Service Corps. The California Health and Human Services Agency is directed to leverage a single online platform to help Californians navigate social services. All EO work streams must incorporate findings from the Engaged California deliberative democracy platform’s current engagement round on AI’s economic and labor impacts.
- Ongoing business feedback and regional support. EDD is directed to include in the California Labor Market Review a summary of business feedback on technology adoption in hiring and workforce decisions, reporting twice per year through 2027. The Jobs First Council is tasked with working with local leadership to support regions facing systemically high unemployment.
Legislative context
The EO arrives against a backdrop of major technology companies announcing significant layoffs attributed to AI-driven efficiency gains, amid growing public anxiety that AI could displace white-collar workers across entire job categories. The EO’s recitals frame the order as the latest step in a broader state effort to balance innovation with worker protection, citing the Governor’s two prior AI-related executive orders, Executive Order N-12-23 (September 2023), which directed guidelines for safe public-sector AI use, and Executive Order N-5-26 (March 2026), which addressed civil rights and privacy in AI procurement, as well as legislation the Governor has signed addressing frontier AI trust and safety, children’s online safety, data privacy, cybersecurity, and consumer protection (for details on California’s recent legislative activity, see our prior client alert here). The EO further acknowledges that, although California already maintains robust worker protections applicable to firms adopting emerging technologies, including anti-discrimination and retaliation safeguards and layoff notification requirements, existing programs such as Work Share remain underutilized and may be inadequate to address the scale and speed of AI-driven disruption.
The EO, and the policymaking it is intended to catalyze, stands in sharp contrast to the Trump Administration’s federal AI strategy, which has expressly promoted deregulation and signaled an intent to preempt conflicting state laws. In December 2025, the White House issued an Executive Order identifying the growing patchwork of state-by-state AI regulation as a barrier to innovation and directing the establishment of an AI Litigation Task Force to challenge state AI laws deemed inconsistent with federal policy (for a detailed discussion of the Trump Administration’s AI Executive Order, see our prior client alert here). By layering the EO’s directives for further study, regulation, and novel benefit-sharing mechanisms on top of its recent legislative push, California is positioned to continue to lead on AI policy and widen the federal-state divide over AI governance.
Our team continues to monitor these developments and their implications for employers that supply AI systems or services to California, and the broader regulatory landscape.
