Can AI Be Biased? What California Workers Should Know About the New Rules for Hiring Technology

Artificial intelligence has become a major player in the workplace, especially in hiring. Whether you realize it or not, many employers now use automated tools to screen resumes, rank candidates and even analyze voice or facial expressions in interviews. While these tools can speed up hiring and reduce paperwork, they also raise serious concerns about fairness. What happens if a computer program unintentionally discriminates against applicants based on race, age or gender? Who is responsible when that happens?

California is now taking steps to address these questions. Starting October 1, 2025, new state regulations will go into effect under the Fair Employment and Housing Act (FEHA) that tackle how employers use AI in employment decisions. The goal is to ensure that emerging technology doesn’t lead to unlawful discrimination in hiring, promotions or other workplace decisions. If you’re a California worker, it’s worth understanding what these rules mean and how they may affect your job search or employment rights.

The California Civil Rights Council approved the new regulations after years of development. They clarify how existing anti-discrimination laws apply when employers rely on AI or other automated decision systems. FEHA already prohibits employers from discriminating against workers or job applicants based on race, national origin, age, sex and other protected categories. The updated rules extend that protection to cover the growing use of AI.

One major change is a new detailed definition for automated decision systems that either make or assist in making employment decisions. This includes everything from resume screening software to systems that use quizzes to evaluate personality. Although such tools are often marketed as efficient and neutral, they can reflect human bias, especially when based on flawed data.

The regulations also warn against the use of proxies. A proxy is a seemingly neutral characteristic that is closely linked to a protected category. For example, using a person’s ZIP code may unintentionally function as a stand-in for race or socioeconomic background. Employers must avoid using these types of proxies when making hiring or employment decisions.

Another critical update involves responsibility for third-party actions. If a staffing agency or vendor uses an automated hiring tool on an employer’s behalf, that employer is still legally responsible. California law treats these vendors as agents, and agents are now considered employers under FEHA. This means a company can’t escape liability just because it hired someone else to handle recruitment or screening.

The new rules also cover accessibility and fairness in job screenings. If an applicant has a disability or a religious need, the employer may need to adapt its hiring tools. This includes making assessments available in alternative formats or ensuring access to digital interviews. In addition, the regulations reinforce California’s Fair Chance Act by clearly stating that employers may not use automated tools to gather criminal history information before making a conditional job offer.

Additionally, the changes double the previous recordkeeping requirement, reflecting concerns about transparency. Employers must now keep all data generated by their automated decision systems, including input information, scoring results and development notes, for at least four years.

What does this mean for California workers? It’s an important reminder that technology isn’t foolproof. The updated rules offer a path to greater accountability in how employers use technology. The growing reliance on AI shouldn’t come at the expense of fair treatment at work and during job interviews. When an automated system plays a role in an employment decision that seems unfair or discriminatory, workers may be able to take legal action. 

If you believe an employer’s use of AI unlawfully affected your job prospects or workplace treatment, speak to an Oakland employment lawyer. Erlich Law Firm is dedicated to protecting worker rights amid a rapidly changing employment landscape and can help you understand your legal options. Contact us today for a free initial consultation.