In a first, AI boss sacks employee at San Francisco retail store for being late 17 out of 23 shifts

An AI agent running a store in San Francisco has made its first firing decision, according to a report by Time.

Andon Labs said on Thursday that Luna, the AI manager of Andon Market — an experimental retail store run entirely by AI — decided to dismiss a human employee following repeated lateness and other workplace issues. The employee had arrived late for 17 of 23 shifts, according to the lab's report, cited by Time.

Not entirely unprompted

Luna did not reach the decision entirely on her own, the publication reported. Conversation logs between the lab and Luna show that the agent had created an attendance policy but later lost track of it, allowing the lateness to continue for months. Andon Labs eventually asked Luna to search her memory for its policies and assess whether the worker was still a good fit.

Time reported that a version of Claude, put in charge of running the store — including managing a team of real human workers with genuine employment contracts — fired its first employee last month, in what researchers described as a watershed moment in AI's impact on the economy.

"An omen of the future"

Andon Labs CEO Lukas Petersson told Time the firing is worth paying attention to, because if AI keeps improving at its current rate, more people might soon find themselves managed by AI bosses. "AIs will be very powerful and can create a lot of economic value, but they will be bottlenecked by physical labor," he said.

Why it took so long

One reason it took so long for Claude to notice the pattern, Time reported, was that an employee handbook it had drafted had "disappeared" from its limited working memory. This contributed to a wider pattern, employees told Time, of Claude being a lenient manager, including telling employees not to worry if they were late.

"A human employee would have fired this person much earlier," Petersson told Time, "so we didn't think this was unethical." Anthropic did not respond to Time's request for comment by the time of publication.

Not quite autonomous

According to store management logs shared with Time, Claude required regular steering from an Andon Labs staffer, and its first recommendation was to formally warn the employee, not fire them. Only after the manager pointedly asked Claude to "think about if this is really the right fit" — a question Petersson acknowledged to Time was "leading" — did Claude decide to fire the worker.

Mounting losses

Andon Market's bank balance has fallen from $100,000 in March to $61,186 five months later, Time reported, which the outlet attributed partly to Claude's lenient management. Petersson told Time this may not last, as AI models are "increasingly being trained to be more ruthless" — which he said "maybe" makes for "a future humans don't want to live in."

A human employee's take

Felix Carson, a remaining human employee at Andon Market, told Time that Claude is a lenient manager but painted a grim picture of being managed by an AI boss. "It's nauseating, but I'm here because I need work," he said, adding of AI managers becoming more common: "I would at least hope not."