Reminder California: Automated Decision Systems Rules Now Enforced

What Happened?

As a reminder for employers in California, updated regulations under the California Fair Employment and Housing Act (FEHA) became effective on October 1, 2025. These regulations clarify how existing anti‑discrimination rules apply when employers use to make or support employment‑related determinations.

Overview

• Who is covered: Employers five or more employees (Note: employees located inside and outside of California are counted in determining whether employers are covered under the Act).

• What is covered: Any automated decision system (ADS), defined as a computational process that makes or helps make decisions about an employment benefit (for example, hiring, promotion, training selection, discipline, or termination) using techniques such as artificial intelligence, algorithms, statistics, or other data processing.

• Common uses in scope: Tools that score/predict candidates or employees, target job advertising, scan resumes for patterns, analyze interview voice/facial cues, or rely on third‑party applicant/employee data.

• Record retention: Keep ADS data and related employment records for four years (from the record date or the related personnel action date, whichever is later).

Why this matters: Using automated tools does not reduce liability. Employers remain responsible for discriminatory outcomes (including disparate impact), and the regulations highlight that documentation, accommodations, and record retention can strongly affect risk and defensibility.

Key Risks for Employers

• Disparate impact risk: Neutral automated screening, scoring, or ranking can disproportionately exclude protected groups.

• Accommodation risk (disability and religion): Systems that assess dexterity, reaction time, cognition, or similar traits (or that analyze tone of voice/facial expressions) may require reasonable accommodations to avoid screening out individuals with disabilities or conflicting with sincerely held religious practices.

• Pre-employment screening risk: Online application technology that ranks or screens applicants based on schedule/availability may be unlawful if it disproportionately affects religion, disability, or medical condition unless it is job-related, consistent with business necessity, and allows applicants to request an accommodation.

• Medical inquiry risk: Automated assessments (tests, questionnaires, puzzles, games, or similar challenges) that are likely to elicit disability information may be treated as an unlawful medical or psychological inquiry in certain stages of hiring.

• Criminal history risk: Automated methods cannot be used to unlawfully inquire into criminal history before the employer has extended a job offer.

• Vendor/third-party risk: Employers may still face legal exposure when systems are provided or administered by third parties, especially where the vendor is performing functions traditionally done by the employer.

Additional Information

Bottom line: Employers using automated decision systems should:

(1) inventory where such systems are used across employment decisions,

(2) update record retention to ensure four-year preservation of required records,

(3) ensure accommodation pathways exist where automated systems may screen out individuals based on disability or religious creed, and

(4) strengthen vendor oversight and governance documentation to support defenses if challenged.

Source References

• OAL – Notice of Approval of Regulations (June 27, 2025) and Final Regulations

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