Inside Jerry McNerney's new AI strategy
QUICK FIX
— A former AI player in Congress brings his battle to Sacramento.
— Lawmakers vow to crack down on digital scammers through tech and banking.
Welcome to California Decoded! Happy Thursday. Send feedback, tips and story ideas to tkatzenberger@politico.com and chasedf@politico.com.
Driving the day
EXCLUSIVE: ENTER BIG FISH — Former Rep. Jerry McNerney — a vocal advocate of AI rules on the Hill — is today pushing his first bill on tech as a California state lawmaker in ambitious new legislation shared first with POLITICO.
The Stockton Democrat tells us he feels more confident about success in his deep-blue home state after 16 years of jumping through hoops in a divided Congress.
'You actually can do things here,' McNerney told California Decoded in an exclusive interview. 'I'm really thrilled about that.'
McNerney's maiden bill on the technology since his election last November, SB 7, seeks to crack down on AI in the workplace by prohibiting employers from using automated decision-making tools to make hiring, promotion, disciplinary and firing decisions without human oversight.
The so-called 'bossware' systems would be barred from obtaining — or using AI to infer — personal information about employees, such as their immigration status, sexual orientation or credit history. Companies would be forbidden from taking adverse actions against workers based on inferences about their future behavior generated by predictive AI tools.
'We're really excited about this one,' McNerney said. 'This is probably going to be our biggest achievement this year.'
It's nothing to sneeze at. His 'No Robo Bosses Act' (insert Terminator jokes here) is one of the influential California Labor Federation's three flagship, first-in-the-nation bills aimed at regulating how companies can use AI-powered systems to monitor and manage workers.
That makes it prime turf for another tense battle pitting labor unions against Big Tech-aligned business groups, which argue their tools already offer privacy protections in compliance with existing state and national laws.
But it's not the earth-shattering entrance that some California tech watchers might have expected from the eight-term representative and former congressional AI Caucus co-chair.
McNerney told us that's on purpose.
'Oh no, no, nothing like that,' he said when asked if he would carry anything rivaling SB 1047, state Sen. Scott Wiener's sweeping AI safety bill that triggered Big Tech backlash and pitted leading congressional Democrats like Nancy Pelosi up against AI doomers like Elon Musk.
'This is my first year here, so I want to map out a long-term plan,' McNerney explained. 'But some things I think are urgently needed right now, and so that's where we're focused.'
McNerney said he's still mulling other ways to push the envelope on AI regulations that fit his pragmatic approach. He declined to share more details for now but expected he'll soon flesh out a placeholder bill, SB 833, that would keep 'humans in the loop' when AI systems oversee 'critical infrastructure,' like water and electric projects.
'Establishing standards is an important part of the process, but we also want humans to be a part of the process,' he said. 'We don't want AI to just go rogue and make decisions without any kind of oversight.'
McNerney's not the only lawmaker stepping back from the brink after industry opposition and Gov. Gavin Newsom's veto pen killed some of the Legislature's most ambitious proposals to rein in AI last year.
Wiener told us last week that he significantly pared back his latest AI safety push, SB 53, in response to Newsom's veto of his SB 1047 last September. Assemblymember Cecilia Aguiar-Curry, a Yolo County Democrat, similarly trimmed her latest push to stick human safety operators behind the wheel of some autonomous delivery vehicles after Newsom sank it last year.
NEWS BREAK: President Donald Trump delays most tariffs on Mexico for one month … Trump says Musk lacks unilateral authority to fire federal workers.
HAPPENING TODAY
2 p.m. PT — California's privacy watchdog, the CPPA, holds a closed-door board meeting to discuss a potential new executive director after former leader Ashkan Soltani departed in January. Soltani helped build out the CPPA following its creation in 2020, including its enforcement division, and made rulemaking recommendations, which faced legal challenges.
It comes as the agency weighs sweeping proposed rules on automated decision-making that have attracted fierce criticism from tech and business groups. The draft regulations would require businesses to scale back their use of automated tools in a wide array of scenarios if customers ask to opt out, ranging from targeted advertising in online shopping to facial recognition software used at ticketing gates.
State Capitol
BILLIONS WITH A B — Californians are losing billions of dollars every year to increasingly sophisticated financial scams that authorities have long struggled to combat since online tricksters often reside abroad. So state lawmakers are promising to introduce more bills this session to crack down not just on scammers, but also the tech and telecom companies they use to bilk billions from the state's economy.
'I suspect we will continue to see bills this legislative cycle to address this,' said state Sen. Monique Limón during a hearing Wednesday on tech-enabled scams at the Senate Banking and Financial Institutions Committee.
California residents have lost at least $2.5 billion to scammers in the last year, U.S. Secret Service San Francisco Special Agent in Charge Shawn Bradstreet told the committee.
Speaking to the committee and representatives from tech industry group TechNet and JPMorgan Chase, Limón said previous bills on the issue had been difficult to advance. She said she hoped to find common ground on heading off scams that target people on social media, through their cell carriers and elsewhere.
Dylan Hoffman said on behalf of TechNet that social media companies have worked hard to detect and flag scammy accounts, many of which originate from overseas, on their sites. 'These are incredibly sophisticated criminal organizations,' Hoffman said.
Options are limited for the state, and even the feds, to bust up overseas crime rings since they lack jurisdiction. Telecom providers are federally regulated and states can't force them to further clamp down on digital shysters.
But putting more pressure on tech companies and banks in California is an option the committee appears to be considering. State Sen. Laura Richardson, for example, has authored a bill that would require increased security for digital payment apps.
State Sen. Tim Grayson, who chairs the committee, told California Decoded a bill Newsom vetoed last year could be resurrected this session.
Authored by former state Sen. Bill Dodd, that effort was aimed at preventing financial abuse of seniors by requiring the flagging and delaying of transactions that could be the result of fraud. Grayson said he wouldn't know for sure if the legislation is coming back until after the deadline to flesh out spot bills.
Byte Sized
— Anthropic submits AI proposal to Trump's White House (POLITICO Pro)
— Former Meta official's 'explosive' memoir to be published next week (AP)
— Crypto can't stop fighting itself (POLITICO)
— California's list of failed tech projects just keeps growing (CalMatters)
— DOGE's play for government data is straining a law inspired by Watergate (POLITICO)
Have a tip, event or AI spaghetti video to share? Do reach out: Emma Anderson, California tech editor; Chase DiFeliciantonio, AI and automation reporter; and Tyler Katzenberger, Sacramento tech reporter.
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