Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Navigating California's New Regulations on Automated Decision-Making Tools, (May 13, 2025)

Law Firms Mentioned:Jackson Lewis

Organizations Mentioned:Jackson Lewis, PC

By Scott P. Jang of Jackson Lewis P.C.

The California Civil Rights Department (CRD) has recently approved regulations under the Fair Employment and Housing Act (FEHA) to address discrimination in employment resulting from the use of automated decision-making systems, including artificial intelligence (AI) and algorithms. These regulations apply to all employers covered by the FEHA and will likely take effect in July, once they complete the final administrative process of approval by the Office of Administrative Law.

Definition of Automated Decision Systems

An automated decision system (ADS) is defined as a computational process that makes or assists in making decisions regarding employment benefits such as hiring, promotion, selection for training programs, or similar activities. An ADS can result from AI, machine learning, algorithms, statistics, or other data processing techniques. The definition of ADS does not include word processing software, spreadsheet software, or other commonly used software for day-to-day work.

Regulations Against Discrimination

Under these regulations, it is unlawful for an employer to use ADS or selection criteria that discriminate against applicants or employees based on protected categories defined under FEHA. Evidence of anti-bias testing of ADS or similar practices may support defenses against discrimination claims. Anti-bias testing involves evaluating automated decision-making systems to identify and mitigate biases that may lead to unfair or discriminatory outcomes, ensuring the system operates equitably across different demographic groups. However, methods of conducting anti-bias testing may vary depending on the ADS used.

Recordkeeping

The regulations require preserving ADS data and related records for four years from either the date of the data's creation or the personnel action involved, whichever occurs later, similar to other types of personnel records and selection criteria. Other revisions include adding ADS to regulations in the definition of “application” or included in “recruitment activity.” Additionally, the regulations specify that using ADS for certain skill testing may necessitate providing reasonable accommodations for religious beliefs or disabilities, ensuring non-discriminatory practices.

Compliance for Employers

For employers in California, the regulations clarify that when using ADS for any aspect of employment, caution should be applied to avoid discrimination. If you have questions about compliance with the new regulations or related issues, contact a Jackson Lewis attorney to discuss.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Scott P. Jang

Jackson Lewis P.C.

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E-mail: myupdates@jacksonlewis.com

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Attorneys: Scott P. Jang (Jackson Lewis).

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