Restriction on Use of AI by Human Resources

Effective October 1, 2025

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The California Civil Rights Department (CRD), via the Civil Rights Council, finalized and implemented groundbreaking regulations on automated-decision systems (ADS) in employment, which took effect on October 1, 2025. These rules amend the Fair Employment and Housing Act (FEHA) to explicitly address how artificial intelligence, machine learning, algorithms, statistics, and other data-processing techniques influence employment decisions—including hiring, promotions, resume screening, applicant evaluation, performance assessments, and determinations about training, pay, benefits, or termination. An ADS is broadly defined as any computational process that makes or assists in making decisions regarding an "employment benefit," encompassing not only advanced AI but also simpler algorithmic tools that could introduce or perpetuate bias.

 

Under the regulations, it is unlawful for employers (or their agents, including third-party vendors providing ADS tools) to use such systems in ways that discriminate against individuals or groups based on protected characteristics—such as race, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age (40+), religion, sexual orientation, or military/veteran status. This prohibition covers both intentional discrimination and unintentional disparate impact, where neutral-appearing tools disproportionately harm protected groups.

 

Employers bear expanded liability for vendor-supplied systems, must retain records of ADS inputs, outputs, and design data for at least four years (to aid investigations or defenses), and are encouraged—or in practice may need—to perform proactive anti-bias testing, audits, or other measures to identify and mitigate risks. Failure to undertake reasonable steps like bias audits could strengthen claims of discrimination.

 

These regulations position California as a national frontrunner in governing AI's workplace applications, extending longstanding civil rights protections to emerging technologies while fostering innovation. As of early 2026, employers across the state must actively audit their automated tools for compliance to avoid potential CRD enforcement actions, complaints, or litigation under FEHA, ensuring that technological efficiency does not come at the expense of equitable treatment.

​​​​​For more information, contact us:
 

Email: paul@amanteHR.com

Tel.: (714) 309-9677

 

This article is for informational purposes only. It is not intended to be, nor shall it be construed as legal advice or guidance.

Consult with a professional for appropriate advice and guidance.