New AI Laws May Go Into Effect As Early As July 1, 2025 | CDF Labor Law LLP

On March 21, 2025, the California Civil Rights Council adopted its final regulations regarding automated decision-making systems. In the employment context, automated decision-making systems can include a wide range of tools that employers use to increase efficiency, such as AI systems to assist in hiring, firing, promotion, cost-cutting, and more. In response to businesses’ growing interest in utilizing automated decision systems, California legislators are looking to address legal concerns associated with such systems.

Previously, on February 7, 2025, the Civil Rights Council published its second round of modifications to proposed employment regulations regarding automated decision systems and invited public comments. Since then, the deadline to submit public comments passed on February 24, 2025. Shortly after, the Civil Rights Council adopted the most recent proposed regulations as final. Once the final regulations are approved by the Office of Administrative Law and published by the Secretary of State, they will likely become effective on July 1, 2025. 

As a reminder, below are some highlights to keep in mind (more details can be found here):

• The definition of “agent” now includes anyone acting on behalf of an employer, such as third parties involved in recruitment, hiring, or promotion through AI systems.
• Employers may face a higher burden to prove they have tested for bias and made efforts to prevent discrimination. A lack of evidence could be used against them.
• Employers must keep AI-related records for four years. These include applications, personnel files, and data from automated decision systems.
• Employers using AI to filter applicants must show the criteria are job-related and necessary, with no less discriminatory alternative that meets their goals.

AI tools will likely become integral to many businesses to maximize efficiency. It is important to work with legal counsel to understand the implications of potential legal liabilities and stay informed about the laws in this area.