California’s AI Employment Discrimination Regs Receive Final Approval

Quick Hits

• The California Civil Rights Council has received final approval for comprehensive regulations governing the use of AI and “automated-decision systems” in employment, aimed at preventing discrimination.
• These regulations clarify that employers must not use “automated-decision systems” that discriminate against applicants or employees based on protected characteristics under California antidiscrimination laws.
• California joins other states in implementing AI regulations for employment decisions while continuing to explore additional legislation to manage the impact of emerging technologies in the workplace.
• California’s new regulations are set to go into effect on October 1, 2025.

On June 27, 2025, the California Office of Administrative Law submitted a notice of approval on the latest modified text of the proposed regulations, which the California Civil Rights Department (CRD) advanced in March 2025. The Civil Rights Council, which is a branch of the CRD, has been considering the regulations for multiple years, going back to at least 2022. The Civil Rights Council said the final language was based on input from nonprofits, businesses, and others in more than forty public comment letters.

The final regulations clarify that it is unlawful for an employer to use an “automated-decision system” or selection criteria that discriminate against applicants or employees on a basis protected by the California Fair Employment and Housing Act (FEHA) and other California antidiscrimination laws.

Rationale

In a statement on the approval, the Civil Rights Council noted that “automated-decision systems” that rely on algorithms or AI “are increasingly used in employment settings to facilitate a wide range of decisions related to job applicants or employees, including concerning recruitment, hiring, and promotion.” While these technologies may have “myriad benefits, they can also exacerbate existing biases and contribute to discriminatory outcomes,” the Civil Rights Council stated. 

“These new regulations on artificial intelligence in the workplace aim to help our state’s antidiscrimination protections keep pace,” CRD Director Kevin Kish said in a statement. “I applaud the Civil Rights Council for their commitment to protecting the rights of all Californians.”

Key Terms

The final regulations amend existing regulations to define key terms related to AI:

• “automated-decision system[s]” are defined as any “computational process that makes a decision or facilitates human decision making regarding an employment benefit,” including processes that “may be derived from and/or use artificial intelligence, machine-learning, algorithms, statistics, and/or other data processing techniques.”

• “agent”—The final regulations consider employers’ agents to be “employers” under FEHA regulations. Specifically, the regulations define “agent” as “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 … including when such activities and decisions are conducted in whole or in part through the use of an automated decision system.” (Emphasis added.)
• “automated-decision system data”—The regulations cover “[a]ny data used to develop or customize an automated-decision system for use by a particular employer or other covered entity.”
• “artificial intelligence”—The regulations define AI as “[a] machine-based system that infers, from the input it receives, how to generate outputs,” which can include “predictions, content, recommendations, or decisions.”
• “machine learning”—The term is defined as the “ability for a computer to use and learn from its analysis of data or experience and apply this learning automatically in future calculations or tasks.”

Unlawful Selection Criteria

The regulations further clarify that California laws prohibiting discriminatory hiring tools apply to automated-decisions systems or AI tools. The regulations state that it is “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 FEHA.

Next Steps

With the regulations, California joins a growing number of states and jurisdictions, including Colorado, Illinois, and New York City, in enacting laws or regulations concerning AI and similar technologies, including their use to make employment-related decisions. At the same time, California continues to mull overlapping pieces of legislation and proposed regulations to manage AI. Notably, a bill called the “No Robo Bosses Act” would require employers to provide human oversight over the use of AI.

The state laws come as President Donald Trump’s administration has sought to remove legal restrictions on AI to promote technology development in the United States. The administration’s spending bill included a ten-year moratorium prohibiting states from enacting or enforcing laws and regulations concerning AI. However, lawmakers in the U.S. Senate modified that proposal, and it was ultimately dropped from the bill as passed by the Senate.

The new California regulations are set to go into effect on October 1, 2025. Employers in California may want to review the new regulations and consider how they impact their operations and employment decision-making policies and practices, including recruitment, hiring, promotions, and disciplinary decisions.

Ogletree Deakins’ Technology Practice Group will continue to monitor developments and will provide updates on the California, Employment Law, and Technology blogs as additional information becomes available.

Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts