California Civil Rights Council Adopts Employer AI Regulations

The California Civil Rights Council recently adopted its final regulations for employer use of automated decision-making systems pursuant to the “No Robo Bosses Act” — a bill that would require human oversight of artificial intelligence (AI) systems in the workplace to help prevent abuses. That proposed legislation was discussed in an earlier post.

The Council adopted the most recent proposed regulations as final, which must be approved by the Office of Administrative Law and published by the Secretary of State.

Key Definitions

California employers should note that these systems can include a number of programs used to increase efficiency. The regulations, which will likely be effective on July 1, 2025, amended or added several key definitions.

“Artificial intelligence” is defined as “a machine-based system that infers, from the input it receives, how to generate outputs. Outputs can include predictions, content, recommendations, or decisions.”

The new regulations define an "agent" 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, which may include applicant recruitment, applicant screening, hiring, promotion, or 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. An agent of an employer is also an “employer” for purposes of the Act.

Similarly, an “employment agency” will now include “any person undertaking, for compensation, to procure the procurement of job applicants, employees or opportunities to work, including persons undertaking these services through the use of an automated-decision system.”

An “Automated-Decision System” is “a computational process that makes a decision or facilitates human decision making regarding an employment benefit, as defined in section 11008(i) of these regulations.” This may be derived from and/or use artificial intelligence, machine-learning, algorithms, statistics, and/or other data processing techniques. The regulations state that Automated-Decision Systems perform tasks such as:

(A) Using computer-based assessments or tests, such as questions, puzzles, games, or other challenges to:

(i) Make predictive assessments about an applicant or employee;
(ii) Measure an applicant’s or employee’s skills, dexterity, reaction-time, and/or other abilities or characteristics;
(iii) Measure an applicant’s or employee’s personality trait, aptitude, attitude, and/or cultural fit; and/or
(iiii)Screen, evaluate, categorize, and/or recommend applicants or employees.

(B) Directing job advertisements or other recruiting materials to targeted groups;

(D) Analyzing facial expression, word choice, and/or voice in online interviews; or

(E) Analyzing employee or applicant data acquired from third parties.

However, this definition excludes word processing software, spreadsheet software, map navigation systems., web hosting, domain registration, networking, caching, website loading, data storage, firewalls, anti-virus, anti-malware, spam- and robocall-filtering, spellchecking, calculators, database, or similar technologies, provided that these technologies don’t make decisions on employment benefits.

Violations

The new rules state that it’s unlawful for an employer or other covered entity to use an automated-decision system or selection criteria (including a qualification standard, employment test, or proxy) that discriminates against an applicant or employee or a class of applicants or employees on a basis protected by the Act, subject to any available defense. Relevant to any such claim or available defense is evidence or the lack thereof of anti-bias testing or similar proactive efforts to avoid unlawful discrimination, including the quality, efficacy, recency, and scope of such effort, the results of such testing or other effort, and the response to the results. As such, California employers may have a higher burden to show that they’ve tested for bias and made attempts to prevent discrimination. Also, a lack of evidence could be used against them.

The regulations also provide that the use of an automated-decision system that, for example, measures an applicant’s skill, dexterity, reaction time, and/or other abilities or characteristics may discriminate against individuals with certain disabilities or other characteristics protected under the Act. To avoid unlawful discrimination, an employer or other covered entity may need to provide reasonable accommodation to an applicant as required by Article 8 (religious creed) or Article 9 (disability) of these regulations.

An automated-decision system that, for example, analyzes an applicant's tone of voice, facial expressions, or other physical characteristics or behavior may discriminate against individuals based on race, national origin, gender, disability, or other characteristics protected under the Act, the rules state. To avoid unlawful discrimination, an employer or other covered entity may need to provide reasonable accommodation to an applicant as required by Article 8 (religious creed) or Article 9 (disability) of these regulations.

Prohibited Practices

The Act’s prohibited practices include any such practice conducted in whole or in part through the use of an automated-decision system. The prohibitions also apply where discrimination resulted, in whole or in part, from an employer’s or other covered entity’s use of an automated-decision system or selection criteria (including a qualification standard, employment test, or proxy). This includes sex discrimination, discrimination based on pregnancy, and immigration-related practices.

Record-keeping

Employers are required to retain AI-related records for four years. This includes:

All applications, personnel records, membership records, employment referral records, selection criteria, automated-decision system data, and other records created or received by the employer or other covered entity dealing with any employment practice and affecting any employment benefit of any applicant or employee.

Bottom Line

Employers should understand the new employment regulations regarding Automated-Decision Systems.

Contact us to discuss any questions about AI in the workplace and to determine if your present employment policies should be updated or whether new employment policies should be drafted.