California lawmakers are considering several bills aimed at regulating artificial intelligence (AI) as the 2025 legislative session nears its end. The proposed legislation has raised concerns among business groups and technology advocates, who argue that the bills use broad and unclear definitions for AI technologies.
Supporters of the legislation say the measures are intended to provide oversight and protection, particularly in employment practices and children’s online safety. However, critics warn that these efforts could hinder California’s position in the global AI industry, which is seen as a potential source of significant tax revenue for state programs.
Senate Bill 7, authored by Senator McNerney (D-Pleasanton), would set new requirements for employers using automated decision systems (ADS) with employees or contractors. These systems are used to improve efficiency and consistency in business operations. The bill would allow employees or contractors to access ADS data related to them and grant them the right to “correct” any information. The process for making corrections or resolving disputes is not clearly defined in the bill.
“For example, a worker could go in and correct all time entries stating they clocked in late,” wrote a coalition of business groups on Sept. 2.
The definition of ADS under SB 7 covers any “employment-related decision,” regardless of significance. The bill also introduces a private right of action, enabling individuals to seek enforcement through legal channels.
Assembly Bill 1064, introduced by Assemblymember Bauer-Kahan (D-Orinda), focuses on protecting children from certain uses of AI such as chatbots. While its goal is enhanced online protections for minors, opponents argue that its language would prevent companies from developing secure AI products supported by many stakeholders.
CalChamber and allied business organizations have noted that AB 1064 defines “covered product” broadly—any product trained on data from someone under age 18. This could affect not only common digital tools but also technologies used in healthcare and education, as well as those designed to block harmful content for young users.
“Restrictions in California this severe will disadvantage California companies training and developing AI technology in the state,” wrote advocates for CalChamber and other opponents in a recent alert to legislators and staff.
Business advocates believe both bills attempt wide-ranging solutions where more targeted regulation might be appropriate. They argue that such an approach could negatively impact California’s role as a leader in AI development.
A summary urging balanced regulation can be found at See the path to balanced AI regulation.
