New California Civil Rights Department Regulations Regarding the Use of Artificial Intelligence in Hiring

08.19.2025

Artificial Intelligence (“AI”) can offer various benefits to employers in hiring practices, such as boosting efficiency when screening applicants. However, employers who rely on AI for hiring purposes should be cautious of potential liability in its deployment, including concerns with potentially discriminatory practices. To address AI-related discrimination in hiring practices, on June 30, 2025, the California Civil Rights Department (“CRD”) published new regulations that will go into effect on October 1, 2025 (Civil Rights Council Secures Approval for Regulations to Protect Against Employment Discrimination Related to Artificial Intelligence | CRD).

In these regulations, the CRD has clarified that existing nondiscrimination laws apply to the use of AI. The CRD clarifies that the use of AI, which is referred to throughout CRD’s new regulations as Automated-Decision Systems (“ADS”), may violate California law if it harms applicants or employees based on a protected characteristic.

CRD’s regulations are applicable to current employees as well as applicants.

The amended regulations acknowledge that ADS can be used to conduct computer-based assessments to measure applicants’ skills, screen applicants and resumes, direct advertisements or recruiting efforts to certain demographic groups, and analyze facial expressions and word choice during interviews. However, the amendments make clear that employers can be held liable for discrimination if they use ADS for any of these purposes in a discriminatory manner. In other words, the CRD regulations that prohibit specific forms of employment discrimination now apply to discrimination through the use of ADS.

Under the amended regulations, it is unlawful for employers to use ADS in a manner that discriminates against applicants or employees based on protected characteristics, which include race, gender, age, disability, and religion. Employers may be held liable if their use of an ADS has a discriminatory effect on applicants based on their protected characteristics, regardless of the employers’ intention. CRD provisions regulating pre-employment practices, such as recruitment and pre-employment inquiries, now also cover pre-employment practices conducted using ADS.

The amendments also discuss increased exposure to liability resulting from the use of ADS. For example, using ADS to measure an applicant’s skills or abilities may disproportionately impact applicants with disabilities, and using ADS that analyzes a tone of voice or facial expression may discriminate against applicants based on race or national origin.

Under the amended regulations, employers are also required to keep records of any ADS data or personnel data generated using AI. Public employers must ensure that they keep these records in accordance with the CRD and Title 5 regulations concerning recordkeeping.

In light of these amendments, employers should be extremely cautious when using ADS in the hiring process because they may now be held liable for discrimination, either through their direct use or outsourced use of ADS. To avoid liability when using ADS, employers should exercise precautions to ensure that interviews, screenings, and tests that are done through ADS are equally accessible to all applicants. To ensure accessibility and avoid disparate treatment claims, employers may also consider engaging in anti-bias testing or similar proactive efforts prior to implementing ADS in hiring. Employers should maintain a record of any proactive efforts taken to minimize bias in ADS because it may become relevant should they face a discrimination claim.

Due to the complexities and potential exposure to liability related to the use of ADS in hiring, we recommend contacting legal counsel for assistance prior to implementation. Please contact your regular AALRR counsel or the authors of this alert if you have any questions.

Special thanks to Law Clerk Anastacia Son for assistance in researching and preparing this alert.