With growing buzz around generative artificial intelligence platforms like ChatGPT, it may sound as though there’s been a recent, massive shift in cutting-edge workplace technology. But here’s the reality: long before “AI” became a household term, businesses – big and small – have relied on software and technology to make smarter, faster decisions and simply run their businesses.

This is the software that helps your local coffee shop manage weekly schedules, or your local car dealership track sales goals. This is not some sci-fi scheme where robots take over as managers – we’re talking about real tools that help businesses of all sizes stay modern and relevant. 

But now, these crucial tools are getting wrongly caught up in concerns about AI. Senate Bill 7 claims to be about regulating AI, but instead, it would layer a blanket of new regulation over businesses large and small that aren’t using any cutting-edge AI. Businesses across the state will find themselves facing new restrictions, costs and forced changes to how they operate. This law would handcuff businesses throughout the state, making us less competitive and unnecessarily dragging down California’s economy.

Too broad of scope

SB 7 claims to be about making sure AI doesn’t hire and fire people all on its own. But instead of focusing on true AI, it would regulate ordinary business software and tools. And instead of focusing on momentous decisions, like hiring or firing someone, the law would inject itself into how businesses use software and systems to make more minor, everyday decisions, like crafting weekly schedules, keeping tabs on productivity, doing performance evaluations and just about any other decisions managers make in the course of a day. If it sounds incredibly broad, that’s because it is.

Logistical and financial strain

If this bill passes, California would require employers to come up with a way to provide all of their employees access, upon request, to a complex and comprehensive overview of any data points that are indicative of their role at a company. That could mean giving each employee a way to access HR software, off-the-shelf enterprise resource planning apps, dashboards, managers’ spreadsheet models, and other systems that help analyze and manage workplaces, or finding ways to provide printouts or copies of that information. And when managers make day-to-day workplace decisions with the help of these kinds of software or systems–no matter how minor – they would have to provide written notices to employees. If an employee disagrees with the outcome, they would have the ability
to appeal.

Based on conservative estimates of appeal rates and data request rates, California employers would need to hire an estimated 2,150 to 4,300 new full-time HR professionals, costing businesses between $523 million and $1 billion per year. 

The administrative burdens imposed by SB 7 would divert precious resources away from creating jobs, offering raises and improving operations. In many cases, small employers might just abandon these tools entirely. This means California businesses would become less efficient and innovative, making our state less competitive.

Competitive disadvantages

Businesses in the state will not be able to afford to hire additional HR professionals and compliance experts just to create new procedures and manage routine technology that helps them run efficiently. Put simply, California lawmakers are looking to slow down our local businesses, making us less efficient and productive than every other state.

As president of VICA, I represent hundreds of businesses that strive to do right by their employees while keeping their doors open in an increasingly challenging climate. We should be encouraging the responsible use of AI technology, not writing blanket laws that make it harder to operate simple, everyday workplace systems.

Stuart Waldman is president of the Valley Industry & Commerce Association, a business advocacy organization based in Van Nuys that represents employers in the San Fernando Valley area at the local, state, and federal levels of government.