California Gov. Gavin Newsom signed a first-in-the-nation executive order (EO) on May 21, aimed at helping organizations and their workers prepare for the labor market changes expected from widespread AI adoption.
The EO directs multiple California agencies to study how AI could reshape employment, hiring patterns, and skills gaps across industries. State officials will also develop recommendations for updating workforce policies and improving support systems for displaced employees, as well as updating California’s Worker Adjustment and Retraining Notification (WARN) Act.
California Continues Its AI Workforce Policy Focus
The EO comes as recent tech layoffs have intensified broader concerns about how quickly AI is impacting the workforce. California is home to many of the world’s largest AI and tech companies. Thirty-three of the top 50 private AI companies in the world are based in the state, according to the press release.
“California has never sat back and watched as the future happened to us — and we won’t start now,” Gov. Newsom said in the press release. “This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future — and that work is starting right here in the Golden State. Today is just the first step as we rewrite policy and direction, creating a future of work that works for all.”
Key Components of the Executive Order
The EO calls for state agencies to evaluate potential updates to the state’s WARN Act, a state labor law that requires covered employers of mid-size companies with 100+ employees to provide workers and state agencies with at least 60 days of advance written notice before a mass layoff or relocation. If there are any updates or revisions to the WARN Act, those will be provided within 180 days.
The EO also includes multiple directives for various state agencies, including:
- Reviewing how AI will impact the collective bargaining process.
- Studying stronger protections and services for workers displaced by AI and automation, including enhanced severance practices and enhancing awareness of existing employment insurance programs.
- Creating educational opportunities for small businesses on AI best practices.
- Expanding workplace training opportunities and AI readiness in higher education.
- Consulting with labor, industry, and academic experts to develop recommendations on AI best practices and early signals of labor disruptions from AI.
- Building a dashboard demonstrating the impact of AI across various labor sectors.
What HR Leaders Should Watch
SHRM’s AI in HR 2026 report found that AI’s impact on the workforce is more about transformation than job displacement, with only 7% of HR professionals reporting job losses tied to AI adoption. Additionally, 57% cited an increased demand for AI upskilling and reskilling, and 24% reported new job creation amidst AI disruption.
AI governance continues to be a blind spot, with 49% of organizations that currently use or are about to pilot AI having internal company policies for workforce regulation. This has led SHRM to develop an AI legislative framework and advocate for a comprehensive national approach to workplace AI.
In California’s case, the EO continues its broader push to shape AI policy at the state level. In recent years, the state has advanced legislation focused on AI transparency, safety standards, and workplace oversight.
For employers and HR teams, the executive order may increase expectations around workforce planning, skills development, and responsible AI adoption. It also reflects a growing policy trend toward measuring how AI affects job quality, career mobility, and employee experience alongside productivity gains.
“AI is transforming the workplace in real time, and California’s executive order underscores the importance of preparing both workers and employers for that transition,” said Emily M. Dickens, SHRM’s chief administrative officer. “SHRM supports a thoughtful, workforce-centered approach that expands AI literacy, strengthens upskilling and workforce development pathways, and helps organizations adopt emerging technologies responsibly. As policymakers evaluate the future impact of AI on jobs and economic opportunity, it will be critical to ensure any new requirements are clear, balanced, and practical for employers of all sizes while supporting innovation, workforce readiness, and employee engagement.”
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