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California employers should audit automated tools used in hiring and other employment-benefit decisions—not just products marketed as AI. Inventory the systems and their uses, trace how they screen or rank people, assess protected-group outcomes and disability-related barriers, document any testing and corrective action, and retain covered employment records for at least four years. California’s Employment Regulations Regarding Automated-Decision Systems took effect October 1, 2025.
What California’s automated-decision rules cover
The California Civil Rights Council’s Employment Regulations Regarding Automated-Decision Systems were approved by the Office of Administrative Law and filed with the Secretary of State on June 27, 2025. They took effect October 1, 2025. The regulations clarify how existing Fair Employment and Housing Act (FEHA) protections apply when automated systems are used in employment decisions.
An automated-decision system (ADS) is a computational process that makes a decision or facilitates human decision-making about an employment benefit. It can use AI, machine learning, algorithms, statistics, or other data-processing techniques. The rules are not limited to tools sold under an “AI” label. Specified general-purpose software and infrastructure are excluded when they do not themselves make a decision regarding an employment benefit; assess what a tool actually does in your process rather than relying on its product description.
The regulations make it unlawful to use an ADS or selection criterion that discriminates against an applicant or employee on a basis protected by FEHA, subject to available defenses. CRD identifies recruitment, hiring, and promotion among the employment activities to consider. An audit should also cover other employment-benefit decisions in which a system may influence who receives an opportunity or benefit.
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California’s rulemaking page separately identifies contractor nondiscrimination and compliance modifications effective April 1, 2026. That date applies to those modifications, not to the ADS regulations, which took effect October 1, 2025.
Build an inventory of systems and decision points
Start with the actual hiring and employment workflow, not a list of software labeled “AI.” Include vendor products, internally developed tools, and systems embedded in broader platforms if they screen, rank, prioritize, assess, or otherwise inform an employment-benefit decision. Examples include resume screening, applicant rankings, candidate tests or games, and tools that target job advertisements.
For each system or use, record:
- The system, vendor, product version, internal owner, and business purpose.
- The employment stage and benefit affected, and the applicant or employee groups exposed to it.
- Inputs and data sources, decision criteria, thresholds, outputs, and any use of proxies.
- Where a person reviews, overrides, or acts on the output—and where a candidate or employee may be screened out.
- Changes to the system, its configuration, or its use that could affect decisions.
- What records the employer and vendor can provide about system use, outcomes, and review.
This inventory helps identify systems that might otherwise be missed, including tools used by recruiters or hiring managers and systems that influence a decision without making the final choice.
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Trace how the system affects people
Map the path from input to employment outcome. Identify the selection criteria and how they are applied, what happens to a person who misses a threshold, and whether outputs affect later human review. Review both the criteria and the process: a human decision at the end does not by itself answer whether an automated step screened out, ranked, or prioritized people in a way that disadvantages a protected group.
Look for direct criteria as well as proxies and indirect pathways. For example, an audit can ask whether an assessment score determines who advances, whether a ranking changes which applications receive attention, or whether ad delivery affects who sees an opportunity. These are questions to investigate, not findings that any particular tool is unlawful.
Assess discrimination risks and bias evidence
Examine selection and other decision outcomes for evidence of discrimination or adverse impact on FEHA-protected bases. The regulations describe adverse impact to include practices that limit or screen out, rank, or prioritize people in ways that disadvantage a protected group. Consider the system’s effects in the context of its criteria, data, and role in the decision rather than treating a vendor’s general assurance as an evaluation of your use.
Anti-bias testing or similar proactive efforts are relevant evidence under the regulations. CRD identifies the quality, efficacy, recency, and scope of the efforts; their results; and the response to those results as relevant considerations. Document what was evaluated, the data and system use covered, material limitations, findings, and resulting decisions or changes.
The reviewed official materials do not establish one universal statistical method, threshold, or testing cadence. Testing is not an automatic safe harbor or guarantee of compliance. Use the method and review schedule appropriate to the system and its use, and seek qualified legal and statistical advice where needed.
Check disability-related assessments and accommodation access
Review tests, questions, puzzles, games, and other assessments for disability-related concerns. A challenge may raise an issue if it elicits disability information or measures a characteristic in a way that creates a disability-related concern. Evaluate whether a person with a disability can access the process and whether the assessment measures job-relevant qualifications rather than an unrelated barrier.
CRD states that employers with five or more employees must provide reasonable accommodation to qualified applicants and employees with physical or mental disabilities unless accommodation would cause undue hardship. Employers must engage in a timely, good-faith interactive process. Make sure applicants and employees can request accommodation, that requests reach a responsible person, and that an individualized assessment can be considered rather than allowing an automated result to end the inquiry.
Document remediation and preserve covered records
When an audit identifies a disparity, barrier, or inappropriate inquiry, keep a record of the issue, the investigation, the decision to continue or modify the system, corrective action, the responsible owner, and follow-up. Where testing or similar proactive work was not conducted, document that fact as part of the record of the system’s review and use; the regulations treat the presence or absence of such efforts as potentially relevant evidence.
CRD’s June 30, 2025 announcement says employers and covered entities must maintain employment records, including automated-decision data, for a minimum of four years. Set retention and access controls for records needed to show how a system was used and what data and outcomes it generated. Confirm the records that must be retained and how other legal duties apply with counsel.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Clarify vendor and agent responsibilities
Document what the employer, vendor, and any agent actually do in recruitment, screening, hiring, or other FEHA-regulated activities. The regulations add definitions for agents and employment agencies and address third-party roles. Do not assume that using a vendor transfers the employer’s responsibilities.
As part of vendor oversight, establish what information is available to investigate a concern: system versions and changes, relevant inputs and outputs, testing details, and records of how the tool was used. Clarify how a concern can be escalated and who can make or implement a change. These practices support an audit; they are not a substitute for evaluating legal responsibility in the specific arrangement.
Set a review process that can respond to change
Assign an owner for each system and preserve a record of the review and its decisions. Revisit an assessment when the system, its data, configuration, criteria, or employment use changes, or when outcome monitoring or an accommodation request raises a concern. This is a practical governance approach; the reviewed sources do not prescribe a single review interval.
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteFor close questions about the operative regulation, system scope, available defenses, or a particular vendor arrangement, consult the codified text and qualified California employment-law counsel. This guide is general information, not individualized legal advice.
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