California AI Hiring Law 2025: New FEHA Regulations Explained
California has finalized new AI hiring rules under the Fair Employment and Housing Act (FEHA) to govern how employers use artificial intelligence and other automated decision systems (ADS) in the workplace. Approved in June 2025 and effective October 1, 2025, these California AI hiring regulations aim to ensure existing anti-discrimination protections keep pace with new technologies
Why It Matters for Business Owners
Automated tools are increasingly used to speed up hiring and promotion decisions. These regulations mean that you must evaluate how those tools work and document your compliance. Even if you buy a third-party product or outsource hiring, you are still on the hook if the system causes discrimination.
Businesses that operate in California or have California employees need to make sure their technology, vendors, and internal policies meet the new standards before October 1, 2025. This is especially important for companies using AI in high-volume recruitment, background screening, or employee evaluations.
Key Provisions
Automated decision systems defined broadly. The rules cover algorithms, machine learning, and other computer processes that make or assist employment decisions — from screening resumes to evaluating employee performance.
Clear statement of liability. If an ADS harms applicants or employees based on protected characteristics such as gender, race, or disability, that can violate California law even if the bias is unintentional.
Medical inquiries. Tests, puzzles, or games delivered by an ADS that reveal disability information may be treated as unlawful medical inquiries.
Record retention. Employers must keep employment and automated decision data, including inputs and outputs, for at least four years.
Third-party systems included. Employers are responsible for compliance even when they use vendors or outside technology — liability cannot be shifted by contract.
Updated definitions. The regulations add definitions for key terms such as “agent” and “proxy” to make it clear who is covered.
We’re Here to Help
We help employers understand how new employment regulations affect their operations. If you’re using AI or automated decision-making tools, our team can review your systems, vendor agreements, and policies so you’re ready when the rules take effect.