December 11, 2025, President Trump signed an executive order, “Ensuring a National Policy Framework for Artificial Intelligence” (“EO”), designed to “remove barriers to United States AI leadership” so that “AI companies [are] free to innovate without cumbersome regulation.”  The EO expressly states that it is aimed at preempting “excessive state regulation.”  So what does this EO mean for California employers?

The EO itself does not preempt any existing state laws, meaning employers should continue to follow existing state laws regarding AI, including California regulations enacted under the Fair Employment and Housing Act (“FEHA”) or the California Consumer Privacy Act (“CCPA”) (effective January 1, 2026).  State laws will remain in effect unless a court blocks them through an injunction or Congress passes a Federal law that preempts the state law.  Instead, the EO directs the Executive Branch to take several actions aimed at reducing state regulation of AI, including the following:

  • The Attorney General must establish an “AI Litigation Task Force,” within 30 days (which has already passed), to challenge state AI laws that are inconsistent with the EO’s purpose of enhancing US AI dominance through a minimally burdensome AI policy framework.
  • The Secretary of Commerce must publish an evaluation of state AI laws, within 90 days, that identifies particularly onerous laws, which conflict with the EO’s purpose.
  • Executive departments and agencies must determine whether to condition federal funding based on if a state’s AI laws conflict with the EO’s purpose.
  • The Chairman of the Federal Communications Commission must initiate a proceeding, within 90 days, to determine whether to adopt a Federal reporting and disclosure standard for AI models that preempts conflicting state laws.
  • The Chairman of the Federal Trade Commission must issue a policy statement, within 90 days, on the application of the FTC Act’s prohibition on unfair and deception acts or practices to AI models.  The statement must explain under what circumstances the FTC Act preempts state laws that require alterations to the “truthful outputs” of AI.
  • The Special Advisor for AI and Cybersecurity and the Assistant to the President for Science and Technology must jointly prepare a legislative recommendation to establish a uniform Federal policy framework for AI that preempts state laws, which conflict with the EO’s purpose.  This legislative recommendation includes four carve outs: 1) child safety protections; 2) AI computing and data center infrastructure; 3) state government procurement and use of AI; and 4) other topics to be determined.

For now, employers should continue to follow all existing state AI laws; however, this area will continue to evolve.  We anticipate active legal challenges on both sides, including the Litigation Task Force challenging state laws and states challenging the EO.  Additionally, state employment laws are not specifically exempt from the legislative recommendation, so Congress could pass laws preempting some state employment-relayed AI laws. 

To learn more about current requirement’s for employers using AI join our upcoming webinar on February 4, 2026: AI in HR: Game-Changer or Legal Minefield?  We will continue to monitor new developments, so check back here for the latest updates.