California: Governor Newsom signs first-of-its-kind executive order to prepare workers and businesses for potential AI disruption

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May 21, 2026

Governor Newsom signs first-of-its-kind executive order to prepare workers and businesses for potential AI disruption

What you need to know:  Governor Newsom is signing a first-in-the-nation executive order to confront the economic impacts of artificial intelligence on workers and small businesses, support workers in sectors impacted by AI transition, and pursue new policies that ensure Californians — not just big tech companies — benefit from the wealth-generating opportunities of the future economy.

SACRAMENTO – Governor Gavin Newsom today issued an executive order directing California to prepare workers, small businesses, and communities for the economic disruption that artificial intelligence will bring to the workforce. The order mobilizes state agencies, labor experts, economists, universities, and industry leaders to develop new policies, gather data, and identify early warning signs of workforce disruption — while ensuring workers share in the gains created by AI-driven productivity.

The order directs the state to explore policies including severance standards, employment insurance and transition support for displaced workers, worker ownership models, universal basic capital concepts, expanded workforce training, and stronger tracking of hiring and payroll trends to help California respond faster to potential layoffs and economic disruption. Read the executive order here.

"California has never sat back and watched as the future happened to us – and we won't start now. We have taken the lead on advancing innovation, safety, and transparency. But we must think bigger. 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."

Governor Gavin Newsom

"As the epicenter of the tech industry, California recognizes our responsibility to ensure workers are prepared for success as AI reshapes the economy. Women, in particular, face disproportionate risks of displacement and widening economic inequality as AI evolves. So, California is committed to understanding AI's impacts on workers, modernizing workforce training, and expanding pathways into the jobs of the future so more Californians are set up for success. Today's executive order underscores California's commitment to advancing opportunity alongside responsible innovation."

Jennifer Siebel  Newsom

California's first-in-the-nation approach

California has dominated AI innovation, with 33 of the top 50 private AI companies in the world based in California, and no state has taken more aggressive action to strengthen the safety, security, and consumer privacy of technology and online platforms. Today's order adds to California's comprehensive approach in creating commonsense guardrails balanced with opportunities to advance innovation in this growing sector.

In 2023, Governor Newsom made California the first state to take action on Generative AI policy, announcing an executive order to both responsibly adopt this technology in state government and begin studying its risks. The Governor convened world-leading academic experts to draft the California Report on Frontier AI Policy, providing the state with policy recommendations that helped lead to the Governor's signature on the first state legislation nationwide, the Transparency in Frontier Technology Act (Senate Bill 53, Wiener) to help ensure that this technology moves forward responsibly. The law has since been replicated and modeled in similar laws adopted in other states.

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This adds to other protections signed by Governor Newsom to create strong protocols for child safety and protections against self-harm, crack down on sexually explicit deepfakes and require AI watermarking, protect performers' digital likenesses, and prevent scams from AI-generated robocalls. In addition, it supplements the Governor's March 2026 executive order, which strengthened civil rights and privacy in California's procurement of AI technology and expanded California's adoption of AI to improve government services.

Shaping response to AI's impact on the workforce

Today's executive order directs state agencies to build a framework for responding to potential workforce disruption and ensuring workers are not left behind as AI adoption accelerates.

. The order directs the various state agencies to:

• Empower workers and help them share in the gains made from AI adoptions:
  • Evaluate and support opportunities to expand and enhance worker ownership models to support broad-based capital growth and build wealth from productivity gains among workers, including employee-owned company structures.
  • Support small businesses through educational and incentive opportunities on best practices and applications for using emerging technology to support competition and broad-based economic growth, while supporting workforce training and retention.
  • Identify ways the collective bargaining process has delivered positive outcomes for workers.
  • Add more on-the-job training and AI preparation in higher education.
• Track and understand the impact of AI on the workforce, filling the gaps of knowledge and providing clear and concrete data with:
  • A new report on recommendations, best practices, and early economic warning signals of potential labor disruptions, drafted in consultation with labor, industry, and academic experts.
  • A new dashboard showing the impact of AI across sectors.
  • Recommendations within 180 days on revisions and updates to the California Worker Adjustment and Retraining Notification (WARN) Act, to ensure WARN can be used to provide early warning data and is responsive to emerging industry trends.  
  • New business feedback on the role of technology in workforce decisions incorporated into the state's monthly jobs report.
• Respond to possible employment and workforce disruption by:
  • Reviewing policies that provide workers with a safety net, including severance and other forms of compensation such as stock or other forms of equity.
  • Increasing awareness and enrollment of employment insurance programs, including employment stability payments.
  • Creating an AI playbook to modernize job training programs, including expanding strategies for connecting dislocated workers with training and technical assistance and updating target industries to reflect emerging economic trends.
  • Creating a single online platform to enable Californians to more easily navigate government services and, ultimately, help Californians identify all social services for which they may be eligible.
  • Leveraging California Volunteers for those experiencing long-term unemployment and to provide essential training for entry-level workers.
• Develop stronger public policy and support programs for using AI to advance the public good:
  • Work with academic experts and the private sector to develop recommendations for altering incentive structures and increasing the likelihood of AI development and deployments that advance the public good and address critical problems facing society.

Every Californian gets a seat at the table

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Governor Newsom announced this month the first-ever statewide deliberative democracy effort with Engaged California to assess the impacts of AI on Californians. All Californians are invited to participate in this innovative program, which provides every resident a seat at the table in shaping state policy on AI. The results of this engagement will help inform all of the activities directed by the EO. Sign up at engaged.ca.gov/ai.

Read the executive order

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