California Amends FEHA to Prohibit AI-Based Employment Discrimination: Effective October 1, 2025

California employers should be aware of an amendment to the California Fair Employment and Housing Act (“FEHA”) that expressly addresses employers’ use of AI systems. The amendment targets the risks of employment discrimination that arise from the use of AI and other “automated-decision systems”, which includes tools that make or facilitate decisions regarding employment.  2 Cal. Code Regs. § 11008.1.

The regulation amends FEHA to prohibit employers from using AI tools, or decisions made by AI tools, that discriminate against a job applicant or employee on the basis of a protected characteristic. In essence, employers cannot avoid liability for discrimination under FEHA solely because they relied on an AI system to make an employment decision. This can include decisions around hiring, recruitment performance, promotions, interviews, and assessments. § 11009.

The amendment also adds a broad definition of an “agent” of an employer under FEHA. An agent is also considered an “employer” for the purposes of FEHA’s regulations. An agent includes any person or vendor acting on behalf of an employer that exercises a traditional employer function. For example, an agent of an employer can include a third-party vendor, such as a recruiting agency, who acts on behalf of the employer during applicant recruitment, screening, or hiring process. Importantly, this also includes any decisions or actions made by an agent using AI. § 11008.

Additionally, the amendment increases the time period requirement for storing applicant and employee information records from two years to four years. Information records include referral records, selection criteria, job applications, personnel records, and importantly, any data used in or resulting from the use of an AI tool. § 110013.

This amendment to California’s FEHA regulations is set to go into effect on October 1, 2025. Employers and HR teams should be aware of these regulatory changes when using AI tools at work. Employers should consider updating their anti-discrimination policies to include the use of AI, and check to ensure that their insurance covers AI-related discrimination claims.

Ensure Your Business is Compliant

As this amendment goes into effect, ensure your business is fully complaint. Navigating new employment laws can be complex, but our experienced employment legal team is here to help. Whether you need a comprehensive review of your policies, employee handbook, or training programs to ensure compliance, Myers Widders provides tailored solutions to keep your business protected and up to date. Reach out to employment law partner, Steven Lee, today for a consultation at: slee@mwgjlaw.com or 805-644-7188.