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Beginning October 1, 2025, California employers will face new compliance requirements governing the use of Automated Decision-Making Systems (ADS) in employment practices — a shift that puts many common HR tools like résumé screeners, applicant tracking systems, and AI-powered assessments under closer legal scrutiny.

The recent amendments to the California Fair Employment and Housing Act (FEHA) have clarified that an employer’s use of automated decision-making systems can constitute unlawful discrimination if it impacts individuals based on a protected characteristic. The updated regulations expand definitions and references throughout FEHA to specify that prohibited practices include those carried out through, or influenced by, automated tools.

In particular, the regulation’s definition of “Automated-Decision Making,” is defined as a “computational process that makes a decision or facilitates human decision making regarding an employment benefit.” The regulations further explain that an ADS “may be derived from and/or use artificial intelligence, machine-learning, algorithms, statistics, and/or other data processing techniques.” Some examples of ADM-use in the workplace include:

• Computer-based tests, such as puzzles and games, designed to make predictive assessments about an applicant or employee, measure an applicant or employee’s skills or dexterity, or measure an applicant or employee's personality traits or cultural fit;

• Screening resumes for particular terms or patterns;

• Analyzing facial expressions, word choice, and/or voice in online interviews.

This includes discrimination based on protected characteristics generally, disability discrimination, improper consideration of criminal history, and practices tied to recruitment, job applications, and other stages of the hiring process.

What Employers Need to Know

California’s anti-discrimination laws apply equally to employment decisions made with automated decision-making systems, meaning it is unlawful to use an ADS if it results in adverse impact on individuals or groups based on a protected characteristic.

Employers and covered entities must maintain personnel or other employment records, including automated decision data, for a minimum of four (4) years from either the date of the data’s creation or the personnel action involved, whichever occurs later.

California employers should regularly review and monitor their automated decision-making tools to ensure they do not produce biased outcomes on protected classes and also align with business goals.

Employers Council members can contact our California Legal Services team at CAINFO@employerscouncil.org with any questions about how these new rules may affect their workplace.

Brittanie Young is an HR Consultant with Employers Council.