Compliance Stuff

On May 21, 2026, California Governor Gavin Newsom signed Executive Order N-6-26 —a sweeping directive aimed squarely at understanding, measuring, and managing the impact of AI on California’s labor market (the “EO”) . The EO reflects significant concern about AI’s potential major impact on all sectors of California’s economy. Why This Order, and Why Now? The already rapid pace of deployment of workplace AI tools continues to accelerate. With this profound shift, the labor market is experiencing significant transformation as employers seek to unlock the substantial potential productivity gains associated with AI adoption.[1] AI is being cited by employers as the primary or sole reason for more than a quarter of recent layoffs.[2] California sits at the center of this transformation . But with no state legislation passed to specifically address the impact of AI deployment upon the labor market, the Governor has responded through executive action. T his is not the first executive order o...

In California, employers are responsible for payroll taxes and contributions, and filing quarterly and yearly reports with the California Employment Development Department (or the “EDD”) on behalf of its employees . There are four kinds of payroll taxes administered by the EDD: Unemployment Insurance, Employment Training Taxes, State Disability Insurance, and Personal Income Taxes. If there is a legally valid relationship, independent contractors operate as separately established businesses and payments to them are treated the same as payments to other companies. To qualify as an independent contractor, the contractor’s business and the parties’ services arrangement must either satisfy all three components of the ABC Test or fall within one of the exceptions to the ABC Test and meet the requirements of California’s common law test, the Borello standard. If the ABC Test or one of its exceptions are not satisfied, the contractor will be deemed an employee, and the contracting company wi...