Get your business ready for California's AI law

The quick answer

California's new AI law (SB 53) takes effect on January 1, 2026. Here is how your business can prepare now:

1. Assess if the law applies directly. Determine if you meet the "large frontier developer" criteria under the California AI law.
2. Audit all your AI systems. Create a complete inventory of every AI tool and platform your business uses, from marketing to operations.
3. Develop an AI safety and usage policy. Document rules for how your team can use AI, focusing on safety, ethics, and acceptable use.
4. Establish clear reporting channels. Create a process for employees to report AI-related risks or incidents without fear of reprisal.
5. Document your risk management strategy. Write down how you identify, assess, and mitigate potential harms from the AI tools you deploy.
6. Train your team on AI compliance. Educate all employees on your new policies and the importance of responsible AI use.

What is the California AI Law (SB 53)?

The Transparency in Frontier Artificial Intelligence Act (TFAIA), or SB 53, is a landmark California AI law signed in late 2025. It creates the first major regulatory framework for advanced AI models in the United States. Its goal is to increase AI safety and transparency without stopping innovation.

The law sets clear rules for developers of the most powerful AI systems. It requires them to test for catastrophic risks, report safety incidents, and be transparent about their safety protocols. While its strictest rules target large corporations, its principles set a new standard for every business using AI.

Who must comply with the California AI law?

The law's core requirements apply to "large frontier developers." This is a specific definition. It includes companies that train "frontier" AI models and have annual gross revenues over $500 million.

A "frontier" model is defined by its computing power. The threshold is any model trained using more than \(10^{26}\) integer or floating-point operations. This currently limits the scope to a handful of major AI labs. You can find the full text and definitions in the official California Senate Bill 53 document.

Why this law matters even if it doesn't apply to you

Even if your company is not a $500M+ AI developer, this law is a signal of what is to come. Regulatory frameworks often start with the largest players and expand over time. States like Colorado and Texas already have their own AI rules, and more are on the way.

Adopting the principles of AI safety and transparency now positions your business as a responsible leader. It also prepares you for future regulations. Getting your house in order today prevents a scramble to catch up tomorrow. It builds trust with customers who are increasingly aware of AI risks.

Your 6 Step AI Law Readiness Plan

Preparing for the new era of AI regulation is a strategic move. Following these steps will help you build a responsible AI framework and protect your business.

Step 1: Assess your direct compliance obligations

First, confirm whether SB 53 applies to you. The criteria are clear: developing a frontier model with over \(10^{26}\) FLOPS in training compute AND having over $500 million in annual revenue. For most businesses, the answer will be no.

If you are a large enterprise or heavily involved in foundational model development, consult with your legal team immediately. For everyone else, this step is simple. Confirm you are not a "large frontier developer" and move on to implementing best practices.

Step 2: Conduct a full AI systems audit

You cannot manage what you do not measure. You need a complete inventory of every AI tool used in your business. This is the foundation of any AI compliance strategy.

Your audit should include:

• Marketing automation platforms
• AI content generators and writing assistants
• Social media scheduling tools with AI features
• Chatbots and customer service bots
• Data analysis and predictive modeling software
• Internal HR and operations tools

For each tool, document its purpose, the data it accesses, and who is responsible for it. This inventory is critical for understanding your risk profile. A thorough audit is the first step in creating effective AI-powered marketing strategies that are both powerful and compliant.

Step 3: Develop your AI safety framework

An AI safety framework is no longer just for major tech companies. It's a practical document that outlines your commitment to responsible AI use. This framework serves as your internal guide for managing AI tools.

Your framework should detail:

• Risk Management Protocols: How you identify and reduce potential risks like bias, inaccuracy, or privacy violations.
• Acceptable Use Policies: Clear "do's and don'ts" for employees using AI tools. For example, a rule against using customer data in public AI models.
• Data Governance: How you handle data used to train or prompt AI systems, especially personal information.
• Testing and Validation: Your process for checking AI-generated outputs for accuracy and brand alignment before they go public.

This document doesn't need to be complex. A simple, clear guide is more effective than a 100-page binder that no one reads. The Electronic Frontier Foundation offers excellent resources on digital rights and transparency that can inform your policy. You can learn more at the EFF's official website.

Step 4: Establish clear reporting channels

The California AI law mandates whistleblower protections for employees at large developers. This is a best practice for every company. Your employees are on the front lines and may be the first to spot an AI system behaving unexpectedly or producing harmful content.

Create a simple, confidential process for them to report concerns. This could be a dedicated email address, a form on your intranet, or a designated manager. Make it clear that reporting potential risks is encouraged and that there will be no negative consequences for doing so. This builds a culture of safety and accountability.

Step 5: Document your risk management strategy

Documentation is your best defense. If a regulator or customer ever questions your use of AI, you need a record of your decisions and processes. This shows you have been thoughtful and proactive about managing AI safety.

Start documenting key items now. For every significant AI tool you use, write down why you chose it, what risks you identified, and what steps you took to mitigate them. If you build AI-driven features into your website or products, this documentation is especially important. Businesses that use our fully managed monthly plans benefit from our built-in compliance and documentation processes.

Step 6: Train your team on AI compliance

A policy is only effective if your team knows it exists and understands how to follow it. Host a mandatory training session on your new AI safety framework and acceptable use policies. Cover the key risks and a review of the reporting process.

Make this training part of your new employee onboarding process. Regular refreshers can also help keep AI safety top of mind. An educated team is your first and best line of defense against AI-related mistakes.

Key Dates and Other AI Laws to Watch

The main provisions of SB 53, the California AI law, are set to take effect on January 1, 2026. This gives businesses time to prepare, but you should not wait to get started.

California is also advancing other AI-related bills that will have a broader impact. Keep an eye out for new regulations that may require:

• Disclosure of copyrighted material used in AI training data.
• Invisible watermarking on all AI-generated content (images, video, audio).
• Clear labeling of AI chatbots to ensure users know they are not interacting with a human.

These pending laws show a clear trend toward greater transparency and accountability. The work you do now to prepare for SB 53 will put you ahead of the curve for these future requirements.