ISSUE BRIEF: BANNING STATE AI REGULATIONS HARMS WORKERS
Executive Summary
Attempts to ban state regulation of artificial intelligence (AI) are dangerous and pose a significant threat to working people who are dealing with an onslaught of AI without appropriate guardrails. It is essential, especially in the absence of federal regulation, to ensure states have the power to protect workers from the unsafe and irresponsible development and use of AI.
FACT: States are advancing and enacting bipartisan policy measures that federal preemption would block.
FACT: Regulation is needed to stop the unsafe, unethical, antidemocratic and antiworker use of AI in the private and public sectors.
FACT: The lack of robust federal guardrails creates a regulatory vacuum that only state and local protections can fill.
Federal Preemption of State AI Regulation Is Dangerous
On May 22, 2025, Republicans in the U.S. House of Representatives passed a budget reconciliation bill with the following language: “No state or political subdivision may enforce any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act.”
Blocking the enforcement of all existing and future state-level AI regulation unleashes tech companies and AI developers to operate without meaningful oversight or enforceable safeguards. Without robust guardrails, data-driven technologies, including AI and automated decision systems, are dramatically reshaping work in ways that harm working people. Employers increasingly use workplace AI systems for key functions, powering dangerous experimentation and undermining workers’ rights.
A lack of scrutiny and regulation undermines safe innovation, while disproportionately benefitting technology companies and employers to maximize profits and control, and exposing the public sector to unproven and potentially dangerous AI-enabled systems. However, Americans reject this vision. Polls consistently show that people want more oversight and accountability for technology. In April 2025, a Pew Research poll showed that about 6 out of 10 people are wary of how U.S. companies develop and use AI.
In the states, lawmakers have come together to protect civil liberties, advance worker protections and prevent discrimination. All 50 states have introduced regulations related to AI, algorithms and machine learning, and around 40 have passed legislation. These legislative efforts are bipartisan and occurring in both red and blue states. This moratorium would nullify enforcement of existing laws across the country. States have long been considered laboratories of democracy, and banning existing and future regulations is an overreach of federal authority and exposes working people to significant harm.
Unregulated AI Harms Workers
AI can harm workers in various ways. Transportation workers are seeing an onslaught of AI-enabled autonomy that is opening the floodgates to surveillance and unproven autonomous vehicles and other technologies that anticipate eliminating the human in charge despite the safety threats to the traveling public. Health care workers, such as nurses, find their schedules and patient assignments determined by secret algorithms that put speed over quality of care and worker well-being. Workers in entertainment and media industries see their works, and often also their voices and likenesses, being stolen by generative AI that threatens to replace them. Schoolteachers face a flood of AI technologies targeting education and even attempts by some to substitute their skill and judgment with AI technology. Federal workers have faced mass layoffs, with brazen attempts to replace their deep expertise with shoddy AI systems. Warehouse workers face technologies that create unsafe working conditions and are monitored in bathrooms at work and private spaces outside of work. AI-driven surveillance has been used to track and stop collective action, impeding workers’ rights to organize. They can even be hired or fired by machines, without even knowing. Without regulation, tens of millions of workers will often be left defenseless when AI systems fail, undermine their rights or discriminate against them.
The harm extends beyond individual workplaces to families and communities. Discriminatory hiring algorithms and surveillance systems can worsen existing and historical patterns based on race, gender and other protected characteristics. When AI-powered chatbots encourage children to harm themselves, communities would have no state or local regulatory protection if federal preemption takes effect. Working families face a future where major life decisions—from securing housing, loans and jobs to educational opportunities—are increasingly determined by unregulated algorithms, with disproportionate negative impacts on already marginalized communities, including people of color, and especially women.
The tech industry claims federal preemption is needed to avoid different regulations in different states. This is a thinly veiled excuse to block regulation altogether. States routinely develop their own regulatory frameworks to address complex challenges without stopping innovation or economic growth. By pushing for a ban on state regulation of AI while there is no federal regulation, advocates of preemption are simply trying to escape accountability. Technology executives have spent a lot of time and money cozying up to federal officials, while also attempting to undermine state and local democratic processes.
Advocates of banning state legislation often claim that different laws across states might impede America’s “competition” with China. However, industries have long used the excuse of global competition to argue for perverse trade policies that weaken labor and environmental standards. It is an old, tired and disproven argument being applied to AI. But even if we were willing to throw aside workers’ and civil rights and the public interest for some ill-defined “advantage,” the idea of an AI “race” is an event with no finish line, a concept with no definition of success. It’s a narrative largely manufactured by the tech industry to argue against regulations and guardrails.
Additionally, commercial AI systems are not closely guarded military secrets, but products available on the open market for global imitation and iteration. So the idea of a secretive, Cold War-style race is illogical. The true motivation for opposing state regulation appears to be protecting corporate profits and not truly advancing the national interests of American workers.
A Ban on State and Local AI Regulation Undermines the Public Interest
All attempts to preempt or ban state and local AI regulation expose working people to potentially severe harm and indiscriminately negate the right of states to protect people from rogue and unsafe use of these emergent technologies. At a time when the federal government is failing to advance meaningful AI policy guardrails, states must retain their authority to create and enforce their own regulations protecting workers and guarding against the risks and harms of AI. Federal policy can create minimum standards, as a floor, with states exercising their authority to develop stronger protections where needed. Policymakers should prioritize the principles of privacy, transparency, safety, accountability, and protection of workers’ and civil rights when regulating AI. If a state and local preemption is enacted, the important work in the overwhelming majority of states will come to a screeching halt, and the positive AI governance reforms already enacted will be rolled back. This would harm working people and the public interest.