New California Regulations on Automated Decision System (ADS) and AI in Employment Decisions

EFFECTIVE OCTOBER 1, 2025

Every day more employers are using AI in hiring and employment practices. The future looks to AI to assist us with employment decisions however we need to be careful about violating discrimination laws. The California Civil Rights Council (CRC) has approved new rules under FEHA addressing the use of automated-decision systems (ADS) and artificial intelligence (AI) in employment.

BACKGROUND

FEHA protects applicants and employees from discrimination based on protected categories such as race, gender, age, disability, religion, and others. The CRC has now clarified how these protections apply when employers use technology to make or assist with employment decisions.

The regulations define how ADS and AI tools may violate FEHA if they screen out or disadvantage applicants or employees based on protected characteristics.

AGENTS MAY ALSO BE LIABLE

The rules extend liability to “agents” — third parties acting for employers, such as recruiters or staffing agencies providing ADS tools.

NEW RECORDKEEPING DUTIES

Employers must now keep four years of records relating to employment practices and ADS usage, including:

• Applications and personnel records
• Selection criteria
• ADS data (inputs, outputs, or data used to design/customize the system)

EMPLOYER ACTION STEPS

Employers can still use ADS but must do so carefully. Practical steps include:

1. Identify Tools in Use Audit hiring, evaluation, and other processes for ADS tools — resume screeners, interview analysis software, assessment games, etc.
2. Evaluate Business Purpose Confirm ADS tools truly support efficiency and legitimate
3. Audit for Bias Conduct regular testing or
4. Maintain Records Keep ADS-related data for four Missing records may be used against employers in litigation.
5. Work with Counsel and Vendors Review vendor contracts and ensure compliance obligations are Remember, liability can extend to both employers and agents.

Automated tools can streamline recruiting and HR tasks — but they also bring new risks under FEHA. California employers must review and monitor any AI or ADS system in use, implement safeguards, and maintain strong records.

JorgensenHR is here to help guide compliance with the new regulations, and work with your employment attorney to reduce risk. Contact us today if you’d like to review your employment technology before the October 1, 2025 deadline.

Contact us today at 661-600-2070 to prepare your business for these changes.