Bans on AI layoffs: Current laws and what might come next
An appellate court in China ruled that employers cannot cite AI as a reason for terminating employees. Is similar legislation likely to occur in the U.S.?
Conversations about AI-attributed job loss center on whether AI technology is sufficiently reliable, accurate and cost-effective to replace human knowledge workers at scale. An equally important consideration is whether new regulations would allow such layoffs.
Government authorities in several jurisdictions have implemented or are proposing restrictions on employers' ability to replace workers with AI tools. For now, it remains to be seen exactly how far bans on AI-related layoffs might go and how strictly government entities will enforce them. Businesses undergoing or managing AI adoption must be aware of government efforts to protect workers from AI job losses and to factor this complexity into their workforce management and regulatory compliance strategies.
But while new and emerging regulations in China, the EU and some U.S. states aim to prevent or limit terminations due to AI, it's still uncertain if these laws will ultimately influence how businesses operate.
In National University's "59 AI Job Statistics: Future of U.S. Jobs," the author cited a statistic that 13.7% of U.S. workers reported losing their jobs to AI or other forms of automation. However, further research provides context for these layoffs. The Information Technology & Innovation Foundation's report, "AI's Job Impact: Gains Outpace Losses," found that in 2024, AI actually created more jobs than it eliminated. In Pittwire's feature story "Who's losing their job to AI," the author reports that while salaries for college graduates have declined in the AI era, that trend started before the introduction of ChatGPT in late 2022.
Despite tech executives' predictions that AI is on the cusp of replacing knowledge workers on a massive scale, and workers' anxieties about this possibility, there appears to be little evidence that this is happening.
AI and labor laws: Are AI layoffs legal?
AI's limited impact on the job market so far is perhaps part of the reason why politicians and regulators have not been especially aggressive in enacting laws to prevent or restrict AI-attributed terminations. At present, workers in most parts of the world have no explicit protection against layoffs due to AI.
There are, however, a few notable exceptions:
China. An appellate court in Hangzhou ruled that companies can't use AI as a reason for reducing headcount. Under Chinese labor law, layoffs are only permitted when businesses face circumstances beyond their control. The court ruled that AI adoption doesn't fall within this category. The ruling constitutes the most direct and significant legal precedent to date that protects jobs in the face of AI.
European Union. The E.U. AI Act includes provisions that restrict employers' abilities to make decisions about workers using AI. It also requires them to collaborate with councils that represent workers prior to implementing AI. While these regulations don't explicitly protect against AI layoffs, they suggest an attempt to do so.
United States. The state of New York requires employers to disclose whether AI is the reason for layoffs; however, it doesn't prevent or penalize AI-related terminations. No businesses have cited AI as a cause for layoffs in New York since this requirement went into effect in early 2025. This could be because AI layoffs haven't happened, but it's more likely because businesses can cite other factors when they choose to replace workers with AI. Another proposed California law, SB 951, would require employers to give a 60-day notice prior to terminating workers due to "technological displacement."
Outside of China, no employees enjoy robust job protections against AI. A few other jurisdictions have enacted laws that regulate AI terminations in some way, but none come as close to banning AI layoffs.
The future of AI job protections in the U.S.
For businesses charting AI adoption and workforce management strategies, leaders need to understand where AI-related labor laws stand today and how they could evolve. This can be difficult, since most governments have given little indication of how they might tighten job protections in the AI era, if at all.
Still, it's not too early to draw some inferences about what might happen. Here's my take, which reflects my work as an IT industry analyst and my perspective as a trained historian:
Employees could find themselves in positions where laws safeguard their jobs, but not their livelihood.
1. Workers shouldn't expect many protections
Compared to many other nations, the U.S. has historically had famously weak labor protections. Even at its peak in the mid-twentieth century, the U.S. labor and unionization movement never secured strict job protections for workers in most industries. The dramatic weakening of the movement over the past several decades suggests that U.S. workers are in a poor position to expect regulators or collective bargaining agreements to protect their jobs against AI.
It's worth noting that AI primarily threatens white-collar jobs, whereas historically, the U.S. labor movement has been oriented around blue-collar workers. There's a chance that regulators or politicians might prove more charitable toward knowledge workers than they have been toward their blue-collar counterparts in recent decades. After all, according to the Department for Professional Employees AFL-CIO, white-collar employees represented nearly half of the U.S. workforce in 2023. These workers are arguably crucial to the national economy, which is now largely powered by industries such as technology and finance. For these reasons, federal and state regulators might decide they need to protect white-collar workers from large-scale replacement by AI.
But on the whole, U.S. political culture has a long track record of prioritizing perceived opportunities for economic efficiency gains over worker protections, and it's tough to imagine that changing due to AI.
2. AI labor regulations will vary widely
If legislators create more laws that prevent or restrict AI layoffs, these laws will likely vary widely across countries and regions, making it easier for businesses to lay off workers in some places than others.
This could lead to a scenario in which businesses operating at a national or global scale shift operations to jurisdictions where AI-related job protections are nonexistent or weaker. This is particularly easy to do when the laborers they need are white-collar workers who can be based almost anywhere, making their jobs highly mobile. It's much easier and cheaper to relocate a software development team to a new state than it is to move an automotive factory.
If that happens, it could make governments wary of restricting employers' ability to replace workers with AI, lest their countries or states lose jobs due to a lack of a competitive edge.
3. AI job protections might lack real teeth
Even if U.S. regulators were to enact stronger AI-related job protections, they would likely prove difficult to enforce. Companies could presumably cite other factors when conducting layoffs, even if their actual plan is to replace workers with AI.
This isn't to say that companies should plan to flout laws should they come into effect. But it does mean that, in practice, the effects of such laws are likely to be limited, and workers shouldn't take too much solace in regulations that nominally prevent businesses from laying them off due to AI adoption.
4. Preventing AI layoffs won't necessarily help workers
It's possible that regulators in more jurisdictions might decide to ban AI layoffs. But it's harder to imagine laws explicitly prohibiting other types of actions, such as reducing employees' salaries or shifting them to other, less desirable positions, as a result of AI.
This is another reason why banning AI layoffs might not provide major protections for workers or tightly restrict the workforce management decisions companies can make. Employees could find themselves in positions where laws safeguard their jobs, but not their livelihood.
AI and the future of the workforce
Despite the precedent set by China, it seems unlikely that most workers worldwide will gain robust protections against AI-driven layoffs. Regulations in other jurisdictions might require certain types of disclosure or notice if AI is a factor in layoffs, but they likely won't ban terminations entirely. Even if they do, the laws will be tough to enforce.
This doesn't mean, however, that business leaders can ignore the potential impact of regulations on their workforce management strategies in the era of AI adoption. Paying attention to the varied and nuanced job protections in certain jurisdictions will be important for avoiding potential sanctions. Likewise, workers concerned about job losses in the AI era should follow developments in AI-related labor laws -- and be careful not to assume that nominal job protections will provide strong safeguards against AI's detrimental impact on workers.
It's worth noting that for businesses, adopting AI and protecting jobs is not an either-or choice. Companies can use AI to augment worker productivity without replacing workers. Inevitable issues, such as risks posed by AI hallucinations, suggest that most AI-powered processes will require humans to remain in the loop. It's also entirely plausible that AI will end up creating more jobs than it replaces, as businesses will require new roles to deploy and oversee AI technology.
So, even if workers lack strong legal protections against layoffs in most countries, that doesn't mean AI will result in an employment bloodbath. AI's impact on the future of work is likely to be more nuanced, and while workers will need to adapt, there's no good reason to believe most will face wholesale job termination.
Chris Tozzi is a freelance writer, research adviser, and professor of IT and society who has previously worked as a journalist and Linux systems administrator.
