18/09/2025
🚨🚨California Law Alert🚨🚨
September 17, 2025
🔥 California Adopts New AI Regulations for Employers 🔥
Beginning October 1, 2025, California’s Fair Employment and Housing Act (FEHA) regulations, which apply to employers with five or more employees, will be amended to address employers’ use of automated-decision systems (ADSs). The amended regulations apply the state’s existing antidiscrimination laws to new technologies like artificial intelligence and introduce key definitions. Highlights are below.
🔊 Automated-Decision Systems
The updated regulations require that employers comply with the state’s existing antidiscrimination laws when using an ADS. For employment purposes, an ADS is any computational process that makes or supports employment decision-making, such as in hiring, promotion, or termination. An ADS uses or draws from artificial intelligence, algorithms, statistics, or other types of data processing to:
Make predictive assessments about applicants or employees, measure their skills, abilities, personality or cultural fit, or otherwise screen and evaluate them.
• Direct job advertisements or other recruiting materials to certain groups.
• Screen resumes for particular terms or patterns.
• Analyze facial expressions, word choice, voice, or other observed traits from online interviews.
• Analyze employee or applicant data from third parties.
🗓️Accommodation Obligations
The new regulations also address that the use of an ADS can lead to discrimination based on disability or religious creed. If an ADS evaluates abilities like dexterity, reaction time, or cognitive traits, it could screen out individuals with disabilities unless reasonable accommodations are provided. Similarly, if an ADS conflicts with an applicant’s or employee’s sincerely held religious belief or practice, employers should consider whether reasonable accommodations are required.
📊Recordkeeping
Employers must retain automated-decision system data for four years from the date the record was created or the date of the related employment action, whichever is later. Automated-decision system data is data used by or produced from an ADS, as well as any data used to develop or customize an ADS.
🚨 Action Items
Ensure ADS data is retained for at least four years.
Make sure HR and managers are aware that accommodations for disability or religion might be required when using an ADS in employment decisions.
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Detailed Analysis
1. Scope – Applies to all California employers with five or more employees.
2. Technology Covered – ADS includes AI, algorithms, statistics, and computational processes that affect hiring, promotion, termination, or other employment decisions.
3. Compliance Requirement – Employers must follow existing anti-discrimination laws when using ADS. This means they cannot let AI tools create bias in recruiting, promotions, or evaluations.
4. Risk Areas –
Predictive scoring of applicants/employees.
Targeted recruiting/ads.
Resume screening filters.
AI-powered interview analysis.
External data enrichment.
5. Disability & Religion – Employers must provide reasonable accommodations if ADS processes inadvertently discriminate.
6. Data Retention – Four-year minimum retention of ADS-related data.
7. Employer To-Do List –
Update HR/AI systems to ensure compliance.
Train HR and managers on accommodation obligations.
Implement data storage practices for ADS decisions.
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Summarized Compliance Overview
Starting October 1, 2025, California employers must ensure that AI-driven employment tools comply with FEHA. Automated systems used in hiring, promotion, or termination must avoid discrimination and be transparent, auditable, and accommodating to disabilities and religious practices. Employers must also retain ADS data for four years and train HR staff on compliance.
