Legislation that could saddle California business owners with significant new costs passed an Assembly policy committee this week.
The California Chamber of Commerce has identified the bill, SB 7 (McNerney; D-Pleasanton), as a Cost Driver because its restrictions on the use of automated decision systems (ADS) in employment would be an impediment to making California more affordable for businesses and consumers.
The bill imposes impractical requirements on employers of every size related to ADS, which would discourage the use of such tools and subject employers to costly litigation and onerous new compliance procedures.
At the June 25 hearing of the Assembly Labor and Employment Committee, supporters of the bill told lawmakers that SB 7 will help workers by allowing more human oversight of decisions made using ADS.
Employer representatives agreed there should be “a human in the loop” for employment decisions, but highlighted continuing concerns with SB 7, including:
• the need to remove independent contractors from the scope of the bill;
• the need for additional clarity in defining the use of ADS in employment-related decisions;
• the volume of notices required by the bill;
• the size of the businesses that would be affected;
• the bill’s onerous appeal provisions;
• the need to rely on ADS for safety purposes.
An analysis of SB 7 prior to the June 19 amendments, conducted for the CalChamber-affiliated California Foundation for Commerce and Education, found that it requires an unprecedented expansion of human resources staff and will saddle businesses with exorbitant new annual costs.
The analysis uses employment and salary data provided by the state and independent sources and is decidedly conservative: It assumes only 2% of workers (including independent contractors) would invoke their right under SB 7 to review all their employment data collected using ADS technology.
Key Vote
SB 7 passed Assembly Labor and Employment on a vote of 5-0.
Ayes: Ortega (D-San Leandro), Elhawary (D-Los Angeles), Kalra (D-San Jose), Lee (D-San Jose), Ward (D-San Diego).
Not voting: Flora (R-Ripon), Chen (R-Yorba Linda).
SB 7 will be considered next by the Assembly Privacy and Consumer Protection Committee.
