An artificial intelligence agent running an experimental San Francisco retail store has fired a human worker for the first time after repeated lateness and other workplace issues, according to Andon Labs, the company behind the experiment.
Andon Labs said Thursday that Luna, the AI manager of Andon Market, decided to dismiss the employee after the worker arrived late for 17 of 23 shifts. Luna is powered by Anthropic's Claude models.
AI manager initially failed to act
Luna did not arrive at the decision entirely on its own. Conversation logs between Andon Labs and the AI agent showed that Luna had created an attendance policy but later lost track of it, allowing the employee's lateness to continue for months, the Business Insider reports.
Andon Labs eventually asked Luna to search its memory for the policies and assess whether the worker remained a good fit. Luna then recommended "parting ways" with the employee. Humans at the lab reviewed the recommendation and carried out the dismissal.
Andon Labs co-founder Lukas Petersson told Business Insider that the lab would intervene if Luna made an illegal or unethical decision, but he did not believe intervention was necessary in this case.
"In this instance, we did not think that that was necessary because the firing was warranted," Petersson said, pointing to the store's policy, which was clearly stated.
"I think obviously the relationship between a manager and an employee is quite delicate, especially depending on the employee's position," Petersson added. "But what we've seen in this experiment is not that the AI would be more ruthless or be worse for the employee in that decision."
According to screenshots and conversation logs posted on Andon Labs' website, Luna gave the employee progressive and repeated warnings and additional training for months without taking any contractual action.
Luna given $100,000 budget to run store
The dismissal came after the experimental store officially opened in San Francisco on April 1. Andon Labs, which tests the limits of AI agents, gave Luna a $100,000 budget, internet access and a corporate credit card, along with instructions to open a store and turn a profit.
Luna selected merchandise, hired contractors, posted jobs on Indeed, interviewed applicants and hired employees for Andon Market. The store sells books, candles, prints, games and branded merchandise.
Andon Labs provided support for more difficult tasks, including permitting, but said it tried to remain as hands-off as possible.
Under the experiment's guidelines, all workers hired by Luna are formally employed by Andon Labs, receive guaranteed pay and have legal protections. The store has generated sales but is not profitable.
Experiment exposes weakness in AI agents
Petersson said the dismissal also highlighted what he described as a persistent weakness in AI agents: they often fail to act without a direct prompt.
"We saw that a human boss would probably fire them much sooner," Petersson said. "I think companies will be run completely by AI in the future, and that AIs will become employers of humans."
