Senate Bill 7 (McNerney) is an extreme and unworkable measure
SB 7 will increase costs to businesses and consumers by $1 billion every year. The measure claims to be about regulating AI to ensure critical decisions – like hiring and firing – aren’t made without human oversight. In reality, SB 7’s overly broad and restrictive language will interfere with even mundane workplace software and systems that businesses rely on daily, while creating unnecessary and unworkable new bureaucratic requirements that will overwhelm employers – and especially small businesses.
Here’s why the legislature should reject SB 7:
Costly For Businesses And Consumers:
- A recent economic analysis found SB 7 will increase costs to businesses by $1 billion every year.
- Small businesses in particular will face unmanageable costs for consultants or technology firms to maintain compliance.
- Employers will have to cut hours, wages or even staff to absorb the cost.
- These costs will ultimately be passed along to consumers – increasing California’s cost of living.
- California’s economy and businesses are already struggling to compete. SB 7 makes things even worse.
Extreme and Unworkable:
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SB 7 isn’t just about high-tech AI—it would also cover basic, everyday software that businesses of all sizes rely on, from your local coffee shop to a family-run grocery store, a neighborhood bookstore, or even a regional restaurant chain or community hospital. The rule would apply to almost anything that helps make work decisions, even if it’s not “AI,” including:
- Scheduling shifts
- Tracking hours and attendance
- Keeping tabs on overtime
- Project planning tools
- Sales performance tracking
- Employee performance reviews
- Tracking and evaluating job applicants
- Dispatching deliveries or service calls
- SB 7 requires businesses to store all data points used by software in making any workplace-related decisions.
- SB 7 impacts millions of decisions made by businesses and creates massive new bureaucracy and red tape for small businesses.
- And any employee can appeal any decision where software played a role, forcing small businesses to establish formal review procedures, dedicate staff time to evaluate appeals.