China’s courts rule workers can’t be fired just because AI replaced them — and the US has no such protections
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China’s courts rule workers can’t be fired just because AI replaced them — and the US has no such protections
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In Hangzhou city, a city off the east coast of China and a major AI hub, a worker only identified by his surname Zhou, was laid off at a tech firm. Zhou’s job, verifying the accuracy of large language models, was taken over by AI. His contract was terminated after he declined a lower-level reassignment with a 40% pay cut, 25,000 yuan ($3,640 USD) monthly to 15,000 yuan ($2,224 USD), according to Xinhua, a state news agency.
An arbitration panel ruled the dismissal was illegal and awarded Zhou with additional severance. The tech firm filed a lawsuit with a Hangzhou district court in August 2025, which they lost. They lost an appeal in April 2026.
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As China sets its sights on global AI dominance, committing $295 billion over the next five years to build data centers, the country’s workforce faces the same job security concerns that have gripped the .U.S workforce. However, court cases in several Chinese cities have ruled in favor of workers who lost their job as a result of AI adoption.
As AI displaces workers in China, courts rule in favor of the workers
In another case, the Guangzhou Intermediate People’s Court upheld a lower court’s ruling that a tech company illegally dismissed a graphic designer when AI took over his work.
Under China’s Labor Contract Law, employers need to prove that a termination is due to a “major change in the objective circumstance,” meaning that an external circumstance renders it impossible for either the employer or employee to fulfill the agreed-upon contract.
The court ruled that replacing workers with AI doesn’t necessarily constitute a major change in objective circumstances. In this specific case, the tech company tried to reassign the graphic designer at a lower salary, which indicated that the firm still had need of his skills
In the ruling, translated from Chinese to English, Judge Chen Shiyuan wrote, “Employers cannot shift the risks associated with normal technological updates onto employees.”
While China’s labor laws protect employees from AI, they’re difficult to enforce. Eli Friedman, a professor of global labor and work at Cornell University, told NPR, “The state does not have the capacity or, frankly, the interest to rigorously enforce its own laws.”
Stateside, Congress has not passed any sweeping laws protecting employees from AI displacement. However, a bill introduced to the House of Representatives by Rep. Greg Casar, Rep. Valerie Foushee, and Rep. Sara Jacobs in early August seeks to implement some protections. The AI Tax and Work Protection Act would create a Work Protection Administration that creates jobs to offset AI layoffs. It’d be funded by a tax levied on AI companies, which would rise with the unemployment rate.
“This bill says: we will not let AI billionaires get rich by putting you out of work,” Casar said in a press release. “Right now, the path we are on is clear: AI will turn a couple of billionaires into trillionaires but leave millions without work. That is unacceptable.”
AI has not upended the U.S. labor market…yet
In May of last year, Anthropic CEO Dario Amodei warned that AI could wipe out half of all entry-level white-collar jobs and raise the unemployment rate between 10% to 20% within the next one to five years.
“Cancer is cured, the economy grows at 10% a year, the budget is balanced — and 20% of people don’t have jobs,” he told Axios, saying it’s the duty of tech companies to be honest about what is coming. “It’s a very strange set of dynamics where we’re saying: ‘You should be worried about where the technology we’re building is going.'”
Over a year later, those impacts have yet to hit the job market as profoundly as Amodei predicted. A July 2026 study conducted by the Stanford Institute for Economic Policy Research found that since 2022, unemployment among the top 20% of AI-exposed workers has risen by 0.77%, while unemployment among the least-exposed workers rose by 0.85%.
However, the study makes a key distinction: AI hasn’t caused significant job losses yet. The study found that young workers are having a harder time finding employment, 5.6% in early 2026 compared to 4% from three years ago.
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Erika McEntarfer, one of the co-author of the Stanford report, told the Guardian, “It took decades for the computer revolution to fully transform labor markets in the workforce, and what we’re seeing right now looks a lot like that.”
