California is one step closer to becoming one of the first states to adopt anti-discrimination regulations regarding employer use of automated-decision technology to make employment-related decisions.

Since May 2024 the California Civil Rights Council (CRC), a branch of the Civil Rights Department, has made multiple revisions to California’s employment discrimination regulations to address employers’ use of artificial intelligence (AI) automated-decision systems to make employment-related decisions such as hiring, promotion, pay and benefits. The purpose of the proposed regulations is to affirm that California’s anti-discrimination laws protect employees and candidates from discrimination caused by the use of automated systems, and to define circumstances in which the use of automated systems can result in unlawful discrimination. The proposed regulations also address the use of automated systems for background checks and medical or psychological inquiries, and how that use can violate anti-discrimination laws. Additionally, the proposed regulations impose recordkeeping requirements that obligate employers to retain records that may relate to or disclose the employer’s use of automated systems to make employment decisions, including applications, personnel records, membership records, employment referral records, selection criteria, and automated-decision system data.

On March 21, 2025, the CRC voted to approve the final and modified text of the proposed regulations. The final proposed regulations include several key changes to the previous versions of proposed regulation, including:

• Expansion of the definition of the term “agent.” The proposed regulations state that a third party acting as an agent of the employer can be held legally responsible for discriminatory use of automated systems. The final modified version expands the definition of “agent” to include any person acting on behalf of an employer, directly or indirectly, to exercise a function traditionally exercised by the employer, such as recruitment, applicant screening, hiring, promotion, or decisions regarding pay, benefits, or leave. 
• Clarification of the definition of the term “automated decision system.” The revisionsclarify that, to be covered by the regulations, an automated decision system must be a computational process that either (1) makes a decision; or (2) facilitates human decision making regarding an employment benefit. The revisions also provide a number of examples of tasks that are performed by automated decision systems, such as predictive assessments, measurement of skills, targeted job advertisements, and screening of applicant data.
• Extension of the duration of the regulations’ recordkeeping requirement. The revisions extend the proposed regulations’ recordkeeping requirement from two years to four years.
• Emphasis on importance of employer’s proactive efforts to avoid discrimination as relevant evidence. The revised regulations explain that evidence that employers conduct anti-bias testing or take other proactive efforts to avoid discrimination can be used by employers to defend against a claim of discriminatory use of AI. The regulations also state that a lack of evidence of such efforts by an employer support a claim of discrimination.

The proposed regulations are currently awaiting approval from the California Office of Administrative Law. It is important to remember that the proposed regulations are not “new” law; rather, they describe conduct that is already unlawful under California’s existing anti-discrimination laws. As such, employers should already be making proactive efforts to ensure that their use of AI does not result in any discriminatory decisions.