Businesses are actively exploring new ways to harness AI for improved efficiency, especially in creating automated decision-making systems that can streamline hiring and recruitment processes. In response, the California Civil Rights Council is proactively developing new laws aimed at preventing potential employment discrimination related to protected characteristics when using AI in these personnel decisions. This includes examining whether seemingly neutral factors, such as criminal history, could still lead to discrimination.
On February 7, 2025, the Civil Rights Council announced its second round of modifications to the proposed employment regulations related to algorithmic decision systems. For employers looking to adopt AI in their personnel decision-making processes, here are some significant changes to consider:
- The new definition of an "agent" has been expanded 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 Fair Employment and Housing Act-regulated activity. This may include recruitment, applicant screening, hiring, promotion, or other 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. This broad definition aims to cover both employers and any third parties assisting employers with AI systems.
- Employers carry a significant responsibility to demonstrate their commitment to preventing unlawful discrimination through anti-bias testing and other proactive measures. "Lack of evidence" could be used against employers who are unable to demonstrate tangible efforts to avoid discrimination. It is essential for employers to provide clear evidence of their initiatives, including the quality and effectiveness of their actions, the timeliness of their efforts, and the scope of such efforts. Moreover, they should be prepared to present the outcomes of their testing and any subsequent actions taken, along with a thoughtful response to those results.
- Employers are now required to retain AI-related records for an extended period of four years, instead of the previous two-year requirement. These records include applications, personnel files, employment referral records, selection criteria, data from automated decision systems, and any other documents created or received by the employer or any covered entity related to employment practices that affect applicants or employees and their benefits.
- Employers must exercise caution when utilizing AI to filter applicants based on protected characteristics, such as disabilities for physically demanding positions. It is essential that the criteria employed for excluding applicants are directly linked to job requirements and consistent with business necessity. Furthermore, employers must demonstrate that there are no less discriminatory standards, tests, or selection criteria that would effectively achieve their objectives.
The deadline to submit public comments on this round of modifications is February 24, 2025. As AI tools increasingly reshape the workplace and employers work to leverage these systems for enhanced productivity, it is important to address the legal challenges that may arise. Engaging with legal counsel can provide valuable insights into potential legal liabilities and help you stay updated on the evolving laws in this area.
