For several months, the California Civil Rights Council (CRC) has been considering proposed regulations regarding employer use of “artificial intelligence” (AI) in making hiring and other employment-related decisions. On March 21, 2025, the CRC adopted its final regulations regarding the use of automated decision systems (ADS).
The regulations do not establish new law. Rather, they apply existing law to AI as employers have increased their use of ADS in making personnel decisions. Specifically, the regulations target potential employment discrimination that can result from using AI, such as failing to hire individuals based on a particular protected basis. Of significant import is the regulations’ definition of an “agent,” which includes:
[A]ny person acting on behalf of an employer, directly or indirectly, to exercise a function traditionally exercised by the employer or any other FEHA (California Fair Employment and Housing Act)-regulated activity, which may include applicant recruitment, applicant screening, hiring, promotion, or decisions regarding pay, benefits, or leave, including when such activities and decisions are conducted in whole or in part through the use of an ADS.
Although the regulations do not specifically include AI developers as “agents,” in theory, they could apply to AI developers if the developers directly or possibly even indirectly assist employers in making employment decisions in a discriminatory manner.
Moreover, the regulations broadly define ADS to mean a “computational process that makes a decision or facilitates human decision making regarding an employment benefit,” such as hiring, promotions, selection for training programs, and compensation.
As a defense to a claim of discrimination using AI, employers may show that they performed anti-bias testing or took other “quality” proactive efforts to avoid illegal discrimination. On the other hand, if there is a lack of evidence of such efforts, this absence may harm the employer’s position.
Finally, the regulations extend the recordkeeping requirement of personnel-related documents from two to four years. These documents include:
[A]ll applications, personnel records, membership records, employment referral records, selection criteria, ADS data, and other records created or received by the employer or other covered entity dealing with any employment practice and affecting any employment benefit of any applicant or employee.
What’s Next
The regulations are now under review at the California Office of Administrative Law for approval. Until they are finalized, employers should continue to monitor their use of AI to ensure they do not inadvertently discriminate against applicants or employees based on protected characteristics.
