California Leads the Way with New Regulations Addressing Use of AI in Employment Decisions
California’s updated regulations regarding the use of artificial intelligence-based (AI) Automated-Decision Systems in employment took effect on October 1, 2025. These regulations address the use of “Automated-Decision Systems,” which the regulations define as computational processes that make decisions or facilitate human decision-making regarding an employment benefit. According to the regulations, “Automated-Decision Systems may be derived from and/or use artificial intelligence, machine-learning, algorithms, statistics, and/or other data processing techniques.”
The regulations make it unlawful to use an Automated-Decision System that discriminates against an applicant or employee based on a protected category under California’s Fair Employment and Housing Act (FEHA). The regulations are aimed at scenarios such as: an employer uses an Automated-Decision System to take an initial pass at applicants’ resumes, and the Automated-Decision System eliminates all applicants with disabilities (or in any other protected class such as based on age, gender, etc.). One example provided by the regulations involves an Automated-Decision System that “analyzes an applicant’s tone of voice, facial expressions or other physical characteristics or behavior [which] may discriminate against individuals based on race, national origin, gender, disability, or other characteristics.”
Notably, the regulations provide that “evidence, or the lack of evidence, of anti-bias testing or similar proactive efforts to avoid unlawful discrimination, including the quality, efficacy, recency, and scope of such effort, the results of such testing or other effort, and the response to the results” is relevant to any claim brought under the regulations.
This language provides a roadmap for employers regarding prevention against claims based on the use of Automated-Decision Systems. Employers using Automated-Decision Systems should take protective measures, such as auditing these systems for bias and requiring vendors to certify that such systems have been thoroughly tested to detect bias and that any bias issues have been sufficiently addressed. As is often the case, California is one of the first states to address this type of technology in the context of its employment laws. We expect other jurisdictions will soon follow suit.
