UCAN Quarterly Update
California’s Legislature has been busy this year, with major budget decisions and sweeping policy packages moving through the Capitol. One of the most significant legislative developments is the unveiling of the Fast Track Housing Package, a bipartisan suite of over 20 bills designed to tackle the state’s housing crisis. This package, which includes two major CEQA reform bills (which are now being elevated to proposed budget language – more on that below), aims to cut red tape, accelerate permitting, and streamline the approval process for new housing—especially in infill and coastal areas. The reforms target long-standing bottlenecks in application, environmental review, and local discretionary processes, with the goal of making it faster and more predictable to build desperately needed homes across California.
Although we had some significant wins in stopping bills that we opposed during the “House of Origin” deadline, several bills with significant business impacts are still advancing in the California Legislature. Notably, AB 1331 (Elhawary), which has passed the Assembly and is now in the Senate, would impose new restrictions on workplace surveillance by limiting employers’ ability to monitor employees in off-duty areas and granting workers the right to disable or leave behind surveillance devices outside of work hours. Employers violating these provisions could face civil penalties and private lawsuits, raising compliance and liability concerns for businesses. The author was forced to take significant amendments in order get enough votes to pass the bill on the Assembly floor; however, at this time UCAN remains opposed to the bill as drafted.
Other high-impact measures still moving include AB 446 (Ward) would prohibit businesses from using personally identifiable information gathered through electronic surveillance technologies—such as purchase history, web activity, or even electronic shelving labels—to set individualized prices for consumers, a practice known as "surveillance pricing." The bill aims to ensure that all consumers are offered the same price for goods and services, regardless of their data profile, and provides for civil penalties against violators, declaring any waiver of these protections void and unenforceable. AB 446 is designed to close a loophole in existing privacy law, strengthen consumer protections, and prevent discriminatory or opaque pricing tactics based on personal data, but we believe it is overly broad and may restrict businesses being able to offer certain kinds of loyalty discounts. SB 384 would effectively ban the use of certain technologies for setting competitive prices, making it harder for businesses to offer discounts and manage supply, while SB 318 (currently held in committee) would add extensive new air quality mandates and permitting requirements, increasing operational costs for sectors like energy, manufacturing, and food production.
Lastly, California SB 7 (McNerney), known as the "No Robo Bosses Act," would regulate the use of artificial intelligence and automated decision-making systems (ADS) in the workplace by requiring human oversight for employment decisions such as hiring, promotion, discipline, and termination. SB 7 is problematic for small businesses because it imposes sweeping and costly regulations on the use of automated decision systems (ADS), including even basic software used for scheduling or workforce management. The bill requires human oversight for all major employment decisions made with ADS, mandates detailed employee notifications, and creates new avenues for lawsuits and civil penalties, significantly increasing compliance costs and legal risks for small employers who often lack the resources to manage complex regulatory requirements. These burdens could discourage the use of helpful technology, drive up operational costs, and ultimately make it harder for small businesses to remain competitive in California’s challenging business climate.
These bills reflect a legislative focus on regulating technology, workplace practices, and environmental standards, and if enacted, could significantly affect compliance, operational flexibility, and costs for California employers. As the session continues, businesses should closely monitor these proposals as they move through policy and fiscal committees in the second house
On June 24th, the Legislature and Governor Newsom released the details of their agreement on the 2025-26 state budget. The $321.1 billion plan responds to a projected $12 billion deficit with a mix of spending reductions, borrowing, and reserve withdrawals. While the budget preserves some key investments, it also includes cuts to programs like Medi-Cal and higher education, and defers certain funding increases to future years. Notably, the Legislature rejected some of the Governor’s most severe proposed cuts, opting for a more balanced approach that attempts to protect vulnerable populations while maintaining fiscal discipline. California’s Democratic supermajority usually means that the budget agreement is fairly routine—however, this year, Governor Newsom’s effort to fast-track housing legislation by tying it to the state budget has sparked intense backlash from within his own party. During heated budget hearings, labor and environmental groups vocally opposed Newsom’s proposal to relax environmental regulations and adjust wage standards for construction workers, arguing it would undermine worker protections and community safeguards. The controversy exposed deep divisions among Democrats, with some likening the proposal to historic injustices and criticizing the governor for attempting to push through major policy changes at the last minute. Despite Newsom’s framing of the plan as essential for addressing California’s housing crisis and affordability issues, the resistance from labor, environmental advocates, and some lawmakers forced the controversial language to come out of the bill.
A major point of contention in this year’s budget debate has been Proposition 36, the voter-approved initiative toughening penalties for repeat theft and drug offenses. Despite passing with overwhelming support, Prop 36 did not receive any dedicated funding in the Governor’s budget, sparking criticism from lawmakers on both sides of the aisle. In the final budget agreement, legislative leaders secured $50 million for county behavioral health departments, $20 million for court costs, and $15 million each for pre-trial services and public defenders. However, law enforcement, probation officials, and supporters of Prop 36 argue that this one-time funding falls far short of the $250–$400 million needed annually for full implementation, warning that without adequate resources, counties may struggle to enforce the law’s new requirements and deliver promised treatment and accountability. The shortfall has led to ongoing arguments about whether the state or local governments should bear the cost of implementing voter mandates.
The Legislature will continue to introduce budget trailer bills, which make changes to state law related to the Budget Act implementation and are organized by major policy areas, through the end of session. It is widely acknowledged that the Legislature will have to come back for a special session in order to take further budget actions in response to pending federal tax and budget legislation.
With the budget mostly settled, attention now turns to the fate of hundreds of bills that have crossed over to the second house. Each bill must now repeat the committee and floor process in the opposite chamber, often facing further amendments and negotiations. The remainder of the legislative year will see intense advocacy as stakeholders push to advance their priorities before the session ends on September 12. Any bills that survive both houses will reach Governor’s desk, where they face the final hurdle of signature or veto. The Governor will have a month to take action on these bills by October 12.
As the session progresses, expect continued debate over housing, public safety, and fiscal priorities, with lawmakers racing to finalize deals and deliver on promises before the year’s end.