August 24, 2026
Automated decision systems legislation reactivated after spending the 2025 session as a two-year bill
AB 1018 (Bauer-Kahan), legislation regulating the development and deployment of automated decision systems, has returned to active consideration after being held as a two-year bill and placed in the inactive file at the conclusion of the 2025 legislative session.
The legislation was originally designed to establish a broad regulatory framework for automated decision systems used in consequential decisions. The previous version included requirements for developer performance evaluations, impact assessments, disclosures to individuals affected by automated decisions, correction and appeal rights and potential civil liability.
The latest amendments substantially narrow and reorganize the proposal. However, OCBC remains opposed to AB 1018 because the legislation continues to create a new state-specific compliance and liability framework for businesses using automated decision systems.
What Changed?
The most significant amendment is the introduction of an “adverse outcome” standard. Several employer obligations now apply only when a covered consequential decision produces an adverse outcome. This represents a meaningful narrowing from the earlier version.
The bill also reduces the scope of covered consequential decisions. Several education-related applications were removed, and the government benefits provision was narrowed to access to government benefits or services.
Developer requirements have also been streamlined. The previous version included detailed impact assessment and third-party audit requirements. Those requirements have been removed from the latest version; developers are now primarily responsible for providing employers with specified instructions and technical information and maintaining related documentation.
The latest version also narrows disclosure and correction requirements. Post-decision disclosure and correction or reconsideration rights are generally tied to decisions resulting in an adverse outcome. At the same time, the timeframe for certain notices has been extended from five days to 30 days.
Additional provisions address federally regulated industries. The amendments include accommodations for certain entities subject to HIPAA and requirements involving FDA-regulated medical devices and related research. The bill also clarifies that it does not require disclosure of nonpublic personal information in a manner that would violate federal financial privacy requirements.
The civil enforcement provision has been narrowed. Auditors are no longer included among the parties subject to civil actions, although developers and employers remain exposed to civil liability.
Why Does OCBC Remain Opposed?
OCBC recognizes that these amendments make AB 1018 more targeted than the version considered in 2025. However, narrowing the bill does not eliminate the underlying concern.
California businesses already operate under a growing collection of state and federal requirements governing privacy, data security, employment, consumer protection and emerging technology. AB 1018 would add another layer of statutory compliance obligations related to the use of automated decision systems.
The concern is particularly significant for businesses that are adopting artificial intelligence to improve productivity, expand services and remain competitive. Regulatory uncertainty and the prospect of civil liability can discourage responsible adoption of new technologies, particularly among small and midsize businesses with fewer resources for compliance.
AB 1018 also continues to raise questions about how California’s framework will interact with evolving federal requirements and regulations in other states. A patchwork of obligations can increase costs and make it more difficult for businesses to develop and deploy technology consistently.
OCBC Position
OCBC supports responsible innovation and recognizes the importance of ensuring that emerging technologies are used appropriately. At the same time, California’s regulatory approach should promote innovation and investment while avoiding unnecessary compliance costs, duplicative requirements and litigation exposure.
The latest amendments represent meaningful improvements, but they do not go far enough to address OCBC’s concerns. OCBC therefore maintains its opposition to AB 1018 and will continue engaging with the author, legislative leadership and stakeholders as the bill moves forward.
The reactivation of AB 1018 is an important development for California businesses and employers. OCBC will continue monitoring the legislation and advocating for an approach that protects Californians while preserving California’s ability to innovate, attract investment and compete in a rapidly changing economy.
For questions, please email Amanda Walsh, Vice President of Government Affairs.
