How banning state regulation of ai harms workers
Published June 26, 2025
Updated November 19, 2025
Authors: Sara Steffens, Director of Worker Power, Congressional Progressive Caucus Center; Samantha Sanders, Director of Government Affairs and Advocacy, Economic Policy Institute
Attempts to ban state regulation of artificial intelligence (AI) — currently proposed as a last-minute addition to the National Defense Authorization Act (NDAA) — are unpopular, dangerous to workers, and fundamentally out of step with the public interest. As AI technologies roll out rapidly across society, this reckless giveaway to Big Tech would have far-reaching consequences for economic fairness, worker power, and public trust.
A broad, bipartisan coalition has already united to oppose moratoriums on AI regulation that would tie the hands of state and local lawmakers. When a similar measure was proposed during budget reconciliation earlier this year, it drew strong opposition from unions, civil rights groups, state lawmakers, state attorneys general, members of Congress across the political spectrum, and the public.
Sneaking a sweeping preemption into a complex, “must-pass” defense bill is an attempt by members of Congress and their Big Tech donors to rush passage of this high-stakes, unpopular policy without the public attention and transparent debate it deserves. By stripping states of their ability to govern AI systems, Congress would hand even more power to Big Tech billionaires while reducing the power of working people and communities.
Congress must act urgently to oppose this harmful AI provision. Lawmakers can ensure that AI develops in ways that are innovative, responsible, and grounded in public trust — while protecting the rights of workers, consumers, and communities.
Congress has a responsibility to establish strong federal standards that ensure new technologies deliver real economic benefits and that workers have power to shape how AI and digital tools are used in their workplaces, including through collective bargaining.
In the absence of comprehensive federal standards, it is critical that states remain free to act. State innovation will inform effective federal policymaking. All 50 states are already exploring or implementing safeguards to address harmful uses of AI. A federal ban would stop all of this progress, blocking commonsense AI protections already in place or in development.
The specific details of this proposed state preemption in the NDAA have not yet been made public. But here are a few key ways banning state AI regulation would harm workers and erode public trust:
MAKE IT EASIER FOR EMPLOYERS TO DISCRIMINATE
The right to equal opportunity at work is already under threat from the Trump administration’s attacks on federal anti-discrimination protections and enforcement. Unregulated AI systems could speed up and cement discrimination even further.
Major employers increasingly rely on predictive AI software and algorithmic analysis to choose who they interview, hire, promote, discipline, or dismiss. We know these untested tools for “automated decision making” can fuel discriminatory outcomes, such as a preference for resumes with white- and male-associated names.
With no federal guardrails in place, and with federal enforcement on anti-discrimination weakened, banningstate action would allow discrimination to flourish unchecked. States must be able to step in to address algorithmic bias and enforce anti-discrimination protections so that everyone has a fair shot at a good job.
MAKE IT EASIER FOR EMPLOYERS TO DRIVE DOWN WAGES
With a low federal minimum wage, rampant misclassification of contract workers, and no guardrails on how employers use AI and algorithms to make decisions about pay, the race to the bottom already experienced by gig workers could become the norm in all industries.
Employers already use algorithms and automatic decision systems to dynamically determine the lowest possible pay for each task, location and individual, with little transparency for workers. If states are blocked from even investigating wage suppression by algorithm, these exploitative practices will spread across all industries.
INCREASE RETALIATION, UNION-BUSTING, AND SURVEILLANCE
Automated surveillance systems and AI-powered monitoring can track everything from workers’ keystrokes and voices to their precise location in their workplace. These tools can be weaponized against workers who organize, speak up about unsafe conditions, or simply take too long in the bathroom. Workers already are vulnerable to unfair — and sometimes illegal — retaliatory discipline and firing. If workers don’t even know the extent to which they are being surveilled, they will struggle to exercise their legal rights or defend themselves from wrongful termination — especially the majority of workers who lack the protections of a collective bargaining agreement.
As one school bus driver told researchers from UC Berkeley Labor Center:
“The bus cameras are the worst — they were originally installed to protect the kids, but now three cameras are pointed directly at us and recording at all times, even when no kids are on the bus. We know now that they use this footage in personnel matters, they listen to us through the bus cameras, and they use the cameras to read our text messages when we are parked and using our phones while the children are off the bus and we are on breaks from work.”
Preventing states from regulating this kind of surveillance would leave workers more vulnerable to unlawful retaliation and to employer wrongdoing, unsafe conditions, and unfair wages.
WORSEN WORKER PRIVACY
Preventing regulation of AI would allow employers and data brokers to accumulate, analyze, and sell vast amounts of highly specific data on individual workers in ways that can never truly be erased. For instance, AI systems interpreting GPS, biometric, and wearable technology data could identify an employee’s private medical conditions before the worker has the chance to invoke ADA or FMLA protections. If this data is sold or shared without limits, that individual could face long-term barriers to employment.
Workers and consumers needtransparency and control over how AI-powered systems use their personal data — not a ban on state oversight.
STEAL CREATIVE WORK
Artists, writers, musicians, and performers are already seeing their work scraped and reused by AI systems without consent or compensation. The ban would make it more difficult for creative workers to protect their work, including their own images and voices. Those whose work is stolen without compensation to fuel large language models may have no recourse, even as big tech companies continue to profit.
HARM PUBLIC SAFETY AND PUBLIC SERVICES
In critical sectors like healthcare, education, and transportation, AI systems are already being used to override expert human judgment. The ban would restrict the ability of workers and their advocates to respond. For example, in healthcare, nurses are fighting to protect patients and provide the care they know is best — even when an algorithm advises otherwise. This is equally true in education, childcare, public safety and transportation — all fields with vulnerable lives and worker safety at risk.
A BETTER ALTERNATIVE IS POSSIBLE
Corporations do not need a blank check and a deregulated landscape to innovate and succeed. The balance of power already tilts too far in favor of employers. Congress should reject any provision that preempts state and local regulation of AI from the NDAA and any other appropriation bills. Instead, policymakers should advance responsible AI policy through the regular legislative process, where these critical issues can be debated and assessed fairly and transparently.