General requirements to tell customers, employees, or the public when AI is being used in decisions. Here is what California businesses need to know in 2026.
SB 942, the California AI Transparency Act, binds “covered providers” — publicly accessible generative-AI systems with over 1,000,000 monthly users. They must offer a free AI-detection tool and embed a latent provenance disclosure in AI-generated image, video and audio content. It is not a general duty for businesses to disclose AI use or offer an opt-out.
State law does not replace federal law — you must comply with both. These federal rules apply to ai disclosure nationwide:
It depends on the thresholds written into the specific statute, and those are not comparable across laws — some key on employee count or revenue, others on user volume or on the kind of system you deploy. We do not publish a generic small-business exemption for California, because stating one the statute does not contain would be worse than stating none. Read the primary source linked from our California law page to confirm whether you are in scope.
The key deadline in California is August 2, 2026 (delayed from January 1, 2026 by AB 853). The law is enacted and compliance is required by the deadline above.
California penalties for AI non-compliance: $5,000 per violation; each day is a discrete violation (AG, city or county counsel). Who enforces, and how, varies by statute — check the primary source linked from our California law page for the enforcement authority and process that actually applies to you.
Federal law does not currently preempt state AI law. California's AI statutes apply independently of federal rules, and federal laws like ECOA, FCRA, and HIPAA apply alongside them — so you must comply with both.
Best practice: document all AI systems used, conduct an internal audit, implement required disclosures, and keep records for at least 3 years. For high-risk uses like ai disclosure, consider hiring an independent third-party auditor to validate compliance.
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