AI Boss Fires an Employee for the First Time

At the experimental "Andon Market" store in San Francisco, artificial intelligence made an independent decision to fire a human employee for the first time. According to research lab Andon Labs, its AI manager Luna — built on Anthropic's Claude models — dismissed an employee who was chronically late for work. The employee had been late to 17 of 23 total shifts.

Luna did not arrive at this decision entirely on its own. Chat logs between the lab and Luna show that the agent had drawn up an attendance policy itself, but later forgot about it and failed to flag the employee's habitual lateness for months. Only after Andon Labs staff asked Luna to recall its own policy and assess whether the employee still met its requirements did the AI recommend "parting ways" with them — a decision that Andon Labs staff then reviewed and carried out.

Andon Labs co-founder Lukas Petersson told Business Insider that the lab would certainly have stepped in had Luna made an illegal or unethical decision, but that wasn't necessary in this case, since the store's policy was clearly defined and the dismissal was justified. "The relationship between a manager and an employee, especially depending on the employee's position, is a very delicate matter," Petersson said, while stressing that the experiment gave no indication that AI is any harsher or worse for employees than a human manager.

The store, which launched in April, was given a $100,000 budget, internet access, and a corporate credit card, with a single mandate for Luna: open the store and turn a profit. Luna independently selected products, hired contractors, posted job listings on Indeed, and interviewed and hired staff. All employees are formally hired by Andon Labs and receive a guaranteed salary and full legal protections.

The store sells books, candles, prints, games, and branded merchandise, but it has yet to turn a profit. Petersson also acknowledged that the experiment exposed a key weakness in AI agents: they often struggle to act independently without an explicit prompt. "A human manager would have fired an employee like this much sooner," he said. Petersson concluded: "I believe that in the future, companies will be run entirely by artificial intelligence, and AI will become people's employer."