| New California Regulations on Employer’s Use of AI to Make Decisions Go Into Effect Oct. 1, 2025 |
| California’s Civil Rights Department (CRD) finalized regulations to restrict the discriminatory impacts of artificial intelligence and automated decision-making in the workplace. The regulations apply to all employers in California and take effect on Oct. 1, 2025. The regulations define an automated decision system (ADS) as any computational process that makes or assists in making employment decisions, such as hiring, promotions, selection for training programs, or similar activities. The regulations apply beyond “machine learning” artificial intelligence and cover systems that involve the use of “selection criteria.” Companies may use regulated ADS to: Screen resumes for particular terms or patterns; Direct job advertisements or recruiting materials to targeted groups; Assess applicants’ or employees’ skills through questions, puzzles, games, or challenges; and Analyze audio or video recordings to evaluate, categorize, or recommend applicants or employees. The regulations prohibit employers from using ADS or selection criteria that discriminate against applicants or employees based on protected categories defined under the Fair Employment and Housing Act (FEHA). AND employers may need to provide reasonable accommodations consistent with FEHA’s religious and disability protections. The regulations emphasize the value of bias audits or other efforts to avoid unlawful discrimination. In discrimination cases, courts and agencies may consider the quality, scope, recency, results, and employer response to bias testing. The absence of such evidence may weigh against employers that choose not to evaluate their ADS. The regulations also impose data collection and retention requirements: Employers must preserve ADS-related records, including dataset descriptors, scoring outputs, and audit findings, for 4 (four) years. These records are essential for demonstrating compliance and responding to any regulatory or legal challenges. Red Flag Tips If you are using or considering using an ADS , the following compliance checklist will assist you with compliance: Audit AI tools used in employee screening, hiring, promotions, selection, and evaluation; Ask vendors for their anti-bias testing protocols, data-use practices, and confirm their understanding of ADS-related liability; While they are not required, consider bias testing routines with legal guidance, both pre- and post-deployment; Update recordkeeping policies to securely store ADS-related data for four years; Ensure human oversight over AI-facilitated decisions; and Train your management team on new definitions and legal responsibilities under FEHA. For additional information, please call our office at (714) 799-1115 |
