AB 2653 California Assembly · 2025-2026 Regular Session

State contracts: report: modern foundation models and associated artificial intelligence systems.

Summary

Existing law, the Transparency in Frontier Artificial Intelligence Act, among other things related to ensuring the safety of certain artificial intelligence models, requires a large frontier developer to write, implement, and clearly and conspicuously publish on its internet website a frontier AI framework that applies to the large frontier developer's frontier models and describes how the large frontier developer approaches, among other things, incorporating national standards, international standards, and industry-consensus best practices into its frontier AI framework. Existing law requires the Department of Technology to make recommendations about whether and how to update certain definitions for the purposes of the act, including the definition of "frontier model" so that it applies to foundation models at the frontier of artificial intelligence development. Existing law requires a contract entered into by any state agency for the procurement or laundering of apparel, garments, or corresponding accessories, or the procurement of equipment, materials, or supplies, other than procurement related to a public works contract, to require that a contractor certify that nothing furnished to the state pursuant to the contract has been laundered or produced by certain types of labor, including sweatshop labor and forced labor, as defined. Existing law requires the Department of Industrial Relations to establish a contractor responsibility program, including a Sweatfree Code of Conduct, to be signed by all bidders on state contracts and subcontracts, as provided. This bill would require the Department of Industrial Relations, in consultation with the Department of Technology, to convene a Foundation Model Labor and Procurement Working Group consisting of 9 members, as provided, to, among other things, assess labor practices underlying the development of modern foundation models and associated artificial intelligence systems and develop recommendations regarding whether and how the state should incorporate labor standards into procurement decisions for foundation models and associated artificial intelligence systems. The bill would require the working group to compile their findings and recommendations into a report and submit that report to the Legislature on or before December 31, 2027.

Issues: ✓ Technology

Bill status in committee 1 of 4 stages cleared

Introduction

Feb 2026

Committee Review

Floor Vote

Governor

Introduced Feb 20, 2026 Last action May 14, 2026

Maddy AI version diff · 3 comparisons

What changed between versions

04/23/26 - Amended Assembly → AB2653 · 3 edits

MINOR

The diff between these two versions of AB 2653 reflects a change in document formatting and presentation rather than any substantive policy modification. The bill text, including all statutory language for the Foundation Model Labor and Procurement Working Group (Sections 12450-12452) and the amendments to Section 6108 of the Public Contract Code, remains identical. The changes consist of removing line numbers and page headers/footers from the legislative document format and adding web navigation elements for a website display.

TECHNICAL

Removed line numbers, page headers, and page footers from the bill text formatting

Added web navigation elements (skip to content, home, accessibility, FAQ, feedback, sitemap, login) for website display

Reformatted the legislative text from a paginated document layout with line numbers to a continuous web page layout

02/20/26 - Introduced → 03/19/26 - Amended Assembly · 9 edits · Mar 19, 2026

MAJOR

The amendment dramatically expands AB 2653 from a minor cleanup of public works contractor eligibility language into a major new regulatory framework requiring state agencies to certify that AI products using data enrichment services (such as content moderation, data labeling, and model training) were not produced by sweatshop or forced labor. It creates a new 'Sweatfree AI Code of Conduct' with living wage requirements, psychological safety standards, independent monitoring, and enforcement penalties for contractors and subcontractors.

Scope change

The bill's scope expands from a narrow nonsubstantive cleanup of public works contractor eligibility language (Section 6109) to a comprehensive new regulatory regime governing labor standards in the AI data enrichment supply chain for all state procurement contracts, with significant enforcement and monitoring provisions.

SCOPE

Extends existing sweatshop labor certification requirements (previously covering apparel, garments, equipment, materials, and supplies) to also cover AI products that require data enrichment services in their production, such as content moderation, data labeling, model training and evaluation, AI Fauxtomation, and data annotation.

DEFINITION

Defines 'data enrichment services' as services including content moderation, data labeling, model training and evaluation, AI Fauxtomation, and data annotation services obtained as part of the deployment, creation, and testing of AI models to secure reliable and safe data.

Redefines 'sweatshop labor' for AI products requiring data enrichment services to mean all work or service extracted from or performed by any person contrary to the conditions outlined in the Sweatfree AI Code of Conduct, rather than the existing definition based on violations of multiple laws of the country of manufacture.

REQUIREMENT

Requires the Department of Industrial Relations to establish a 'Sweatfree AI Code of Conduct' by July 1, 2027, to be signed by all bidders on state contracts and subcontracts, developed with input from an advisory panel whose majority must be experts from trade unions and civil society organizations.

Requires contractors and subcontractors producing AI products that use data enrichment services to compensate workers at a minimum with wages and benefits consistent with a living wage, and to ensure the workplace is free from psychological harms.

ENFORCEMENT

Establishes sanctions for non-compliance including voiding contracts at the state agency's option, penalties equal to the greater of $1,000 or 20 percent of the value of goods produced in violation, and removal from the bidder's list for up to 360 days. Moneys collected are deposited into the General Fund.

Creates a process for independent monitoring or inspections for complaints against contractors and subcontractors, which may be conducted by the Department of Industrial Relations, bona fide labor organizations, or specific types of nonprofit organizations.

TIMELINE

Sets a July 1, 2027 deadline for the Department of Industrial Relations to update its contractor responsibility program with the Sweatfree AI Code of Conduct. Allows a phase-in period of up to one year for apparel and AI product procurement policies, and up to three years for other procurement categories.

FISCAL

Fiscal committee review changed from 'no' to 'yes' and state-mandated local program changed from 'no' to 'yes', reflecting the expanded scope. The bill states no reimbursement is required because it creates a new crime or infraction.

03/19/26 - Amended Assembly → 04/23/26 - Amended Assembly · 7 edits · Apr 23, 2026

MODERATE

AB 2653 was significantly restructured between these versions. The amendment to Section 6109 (public works ineligible contractors) was removed entirely, and a new Chapter 6.5 was added establishing a Foundation Model Labor and Procurement Working Group of nine members tasked with studying labor practices in AI model development and recommending whether the state should tie procurement decisions to labor standards for foundation models by December 31, 2027. The bill now also requires fiscal committee review, reflecting its expanded scope into AI policy.

SCOPE

The amendment to Section 6109 of the Public Contract Code (prohibiting public entities from permitting ineligible contractors or subcontractors on public works projects) was removed from the bill entirely.

A new Chapter 6.5 (Sections 12450-12452) was added to Part 2 of Division 2 of the Public Contract Code, establishing a Foundation Model Labor and Procurement Working Group consisting of nine members appointed by the Speaker of the Assembly, the Governor, and the Senate Committee on Rules.

REQUIREMENT

The working group is required to assess labor practices in foundation model development (including data annotation, content moderation, and reinforcement learning with human feedback), evaluate state agency procurement of AI systems, analyze impacts of procurement restrictions, and develop recommendations on whether to incorporate labor standards into procurement decisions for foundation models.

TIMELINE

The working group must compile its findings and submit a report to the Legislature on or before December 31, 2027, in compliance with Section 9795 of the Government Code.

DEFINITION

New definitions were added for 'artificial intelligence' (an engineered or machine-based system that infers from input how to generate outputs) and 'foundation model' (an AI model trained on a broad data set, designed for generality of output, and adaptable to a wide range of tasks).

FISCAL

The fiscal committee designation changed from 'no' to 'yes,' indicating the bill now requires review by the Legislative Fiscal Committee, likely due to the new working group's operational costs.

TECHNICAL

Minor conforming edits throughout Section 6108: 'supplies' was added alongside 'materials' in several procurement references, and 'employee' was changed to 'worker' in a few places for broader applicability.

Floor votes

How they voted

No floor votes recorded yet.

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Amendments

May 14, 2026

Lower · Passed

In committee: Held under submission.

lower

May 6, 2026

Committee

In committee: Set, first hearing. Referred to APPR. suspense file.

lower

Apr 27, 2026

Committee

Re-referred to Com. on APPR.

lower

Apr 23, 2026

Lower · Passed

Read second time and amended.

lower

Apr 22, 2026

Introduced

From committee: Amend, and do pass as amended and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 15. Noes 0.) (April 21).

lower

Apr 16, 2026

Committee

(Pending re-refer to Com. on G.O.)

lower

Apr 9, 2026

Lower · Passed

From committee: Do pass and re-refer to Com. on P. & C.P. (Ayes 5. Noes 0.) (April 8). Re-referred to Com. on P. & C.P.

lower

Mar 26, 2026

Committee

Re-referred to Coms. on L. & E., P. & C.P., and G.O.

lower

Mar 23, 2026

Committee

Re-referred to Com. on G.O.

lower

Mar 19, 2026

Introduced

From committee chair, with author's amendments: Amend, and re-refer to Com. on G.O. Read second time and amended.

lower

Mar 19, 2026

Committee

Referred to Coms. on G.O., L. & E. and P. & C.P.

lower

Feb 21, 2026

Lower · Passed

From printer. May be heard in committee March 23.

lower

1 primary · 0 co-sponsors