Many employers are now using Artificial Intelligence (AI) to make or assist in making employment decisions, such as hiring, promotions, selection for training programs, or similar activities. Some examples of how AI is used in this context are screening resumes for particular terms or patterns; direct job advertisements or recruiting materials to targeted groups; assessing applicants’ or employees’ skills through questions, puzzles, games, or challenges; and analyzing audio or video recordings to evaluate, categorize, or recommend applicants or employees.

The new regulations issued by the California Civil Rights Department and which came into effect October 1, 2025, prohibit employers from using AI or other selection criteria that discriminate against applicants or employees based on protected categories defined under the Fair Employment and Housing Act (FEHA) which include race, color, religion, national origin, those with disabilities and other protected categories.

The new regulations emphasize the importance of bias audits or other efforts to avoid unlawful discrimination. In discrimination cases, courts and agencies may consider the quality, scope, recency, results, and employer response to bias testing. The absence of such evidence may weigh against employers that choose not to evaluate their use of AI.

The regulations also impose data collection and retention requirements. Employers must preserve AI related records, including dataset descriptors, scoring outputs, and audit findings, for four years. These records are essential for demonstrating compliance and responding to any regulatory or legal challenges.

In an effort to comply with these new regulations, employers should consider the following:

• Audit AI tools used in employee screening, hiring, promotions, selection, and evaluation;
• Consider bias testing routines with legal guidance, both pre- and post-deployment;
• Update company recordkeeping policies to securely store AI related data for four years;
• Make sure there is human oversight over AI-assisted decisions; and
• Train HR and management teams on the new legal responsibilities under FEHA.

If you have questions about the new AI regulations, contact our employment attorney Scott Liner at [email protected].

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_{Please note that this article is for informational purposes only and should not be considered legal advice and does constitute an attorney-client relationship. It is recommended to consult with an attorney directly for specific guidance pertaining to your business and its practices.}