New AI-Related Employment Regulations are Coming to California on October 1st

Earlier this year, the California Civil Rights Department (CRD) issued new employment regulations related to the use of artificial intelligence (AI) by employers. The regulations took effect in the state on October 1, 2025. Within this article, our California employment law attorney for employers highlights the key things that you and your company should know about the state’s new AI regulations.

Key Takeaway: Why the AI Regulations Matter for Employers in California

On June 30, 2025, the CRD obtained final approval for regulations governing the use of automated decision systems (ADS) in employment contexts, including for hiring, promotion, advertising, and evaluation of workers. Here is the fundamental point that employers in California need to know:

• The updated regulations now in effect clarify that any use of ADS that results in discrimination (whether intentional or through disparate impact) based on protected characteristics under the Fair Employment and Housing Act (FEHA) is expressly prohibited.

In other words, ADS, which is a term that effectively means using AI for employment purposes, cannot have discriminatory results. If employment decisions made with the help of ADS result in discrimination, then the employer that relied on the AI technology can be held legally liable under FEHA. The employer’s argument that it used AI is not a defense against a discrimination claim.

Understanding the Scope of the Regulations: What Employers Need to Know 

The California regulations adopt a broad definition of ADS, encompassing any computational process (algorithms, AI, machine learning, statistics, etc.) that makes or aids an employment decision—such as resume screening, targeted job ads, video or audio analysis, skills puzzles,. Notably, the rules clarify that “agents”, including third-party vendors acting on behalf of the employer, also fall under FEHA. Employers are still responsible for any discriminatory outcomes generated by outsourced ADS tools. Outsourcing decision-making cannot absolve any employer of liability for discriminatory practices.

Recordkeeping for AI and Employment in California: More Than Just Paperwork

One critical new development: employers must now retain all ADS-related records for at least four years. To be clear, that is a major shift. It doubles the previous two-year requirement. These records include dataset descriptors, scoring outputs, audit results, and related documentation. It is imperative that employers have a process in place for keeping all relevant records. A top-tier employment lawyer can help. Having robust recordkeeping procedures will be crucial—not only for compliance, but also to defend against any allegations of bias or discriminatory practices in future litigation or a  regulatory review of your workplace practices.

Contact Our California Employment Lawyer for Employers Today

At Sloat Law Group, APC, our California employment attorney has the experience employers can rely on. If you have any specific questions or concerns about the new AI requirements, we are here to help. Please do not hesitate to contact us today for a completely confidential, no obligation consultation. With an office in Riverside County, we work with employers statewide in California.

Source:

 calcivilrights.ca.gov/2025/06/30/civil-rights-council-secures-approval-for-regulations-to-protect-against-employment-discrimination-related-to-artificial-intelligence/