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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However, court cases in several Chinese cities have ruled in favor of workers who lost their job as a result of AI adoption. 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. Valerie Foushee, and Rep. Sara Jacobs in early August seeks to implement some protections.
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