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Topics: AI in the Workplace, Personnel Policies and Procedures
It is no surprise that businesses are seeking ways to utilize AI to increase efficiency, including developing automated decision-making systems to assist in hiring and promotion processes. The California Civil Rights Council is actively working on new laws to address potential employment discrimination based on protected characteristics when using AI in personnel decisions. This includes considerations of whether facially neutral factors (e.g., criminal history) may still constitute discrimination.
On February 7, 2025, the Civil Rights Council published its second round of modifications to proposed employment regulations regarding automated decision systems. For employers in the process of implementing AI to make personnel decisions, here are some notable changes to keep in mind:
- The new definition of an “agent” has been expanded to include any person acting on behalf of an employer, directly or indirectly, to exercise a function traditionally exercised by the employer or any other FEHA-regulated activity. This may include recruitment, applicant screening, hiring, promotion, or other decisions regarding pay, benefits, or leave, including when such activities and decisions are conducted in whole or in part through the use of an automated decision system. This broad definition aims to cover both employers and any third parties assisting employers with AI systems.
 - Employers may bear a higher burden of proving they have performed anti-bias testing or similar proactive efforts to avoid unlawful discrimination. “Lack of evidence” could be used against employers who cannot demonstrate concrete efforts to avoid discrimination, including the quality, efficacy, recency, and scope of such efforts, the results of such testing or other actions, and the response to those results.
 - Employers must retain AI-related records for a longer period—four years instead of two. These records include all applications, personnel records, employment referral records, selection criteria, automated-decision system data, and other records created or received by the employer or any other covered entity dealing with employment practices that affect any employment benefit, applicant, or employee.
 - Employers need to be cautious when using AI to filter out applicants based on protected characteristics (e.g., disabilities for physically demanding jobs). They must demonstrate that the criteria used to exclude applicants are job-related and consistent with business necessity, and that there is no less discriminatory standard, test, or other selection criteria that serves the employer’s goals as effectively.
The deadline to submit public comments to this round of modifications is February 24, 2025. Â
As AI tools continue to transform workplaces and employers strive to implement AI systems to maximize efficiency, they inevitably encounter various legal pitfalls that are tricky to navigate. It is prudent to work with legal counsel to understand the implications of potential legal liabilities and stay informed about the ever-evolving laws in this area. Feel free to contact Linda Wang or your preferred CDF attorney for a consultation.