As California lawmakers consider regulating the use of AI for hiring as part of a larger effort to address employment discrimination, here’s what HR leaders in the state—and across the country—need to know.
By Maggie Mancini
As artificial intelligence (AI) tools continue to reshape the world of work, efforts to regulate the use of AI for hiring and other employment decisions are making headway across the country. Earlier this year, in fact, lawmakers in California introduced legislation as part of a larger effort to regulate the use of AI and other automated decision tools in talent screening and selection.
The bill, which has been making its way through the California legislature since the spring, seeks to prohibit employment discrimination or unjustified different treatment based on age, race, gender, disability, or other protected characteristics that may arise through the use of automated decision tools, including AI-enabled hiring software. Among other things, the bill would require organizations to conduct impact assessments when an AI tool is implemented and then annually after it has been deployed. In addition, employers would be required to notify people who are subject to consequential decisions made using AI.
“This legislation highlights the growing scrutiny of AI’s role in hiring and underscores the importance of fair and equitable AI practices,” says Melanie Ronen, an employment lawyer and partner at Stradley Ronon.
Shortly after the bill was introduced, the California Civil Rights Council (CRC) released its own set of proposed regulations to protect against employment discrimination resulting from AI use. The CRC’s regulations include:
- clarifying that it’s against state law to use AI hiring tools that harm applicants based on protected traits;
- guaranteeing that AI-enabled hiring does not replace the requirement for individualized assessment when considering an applicant’s criminal history; and
- ensuring that organizations maintain employment records—including information included in an AI-enabled screening—for a minimum of four years.
Aside from AB2930 and the CRC’s proposal, the U.S. Equal Employment Opportunity Commission has issued guidance regarding how the use of AI in hiring may impact individuals with disabilities, Ronen says. This includes the use of facial recognition technology, chatbots, gaming, and personality assessments.
“Employers must be vigilant about the potential exclusionary effects of these technologies and may have an obligation to engage in the interactive process or provide reasonable accommodations if these or other technologies operate to exclude individuals with disabilities who are able to perform the essential functions of the position,” Ronen says.
How Employers Can Prepare for Changes
In the wake of local, state, and federal efforts to regulate the use of AI in employment decisions, employers in California—and across the country—can assess where AI is used in their employment processes, how it is being used, and whether there are any adverse impacts resulting from its use, Ronen says.
Employers should review and update contracts with their AI vendors to ensure they are up to date with the latest AI-related standards and best practices. Additionally, it’s important for organizations to stay informed about legislative updates and engage their legal teams to navigate evolving regulations.
“Maintaining compliance will require strategic oversight that includes a governance program, effective communication with third-party vendors, and regular assessments to ensure adherence with the legislation’s requirements,” Ronen says. “Leaders should establish a compliance framework that integrates AI usage policies with broader HR compliance strategies, ensuring a cohesive approach to technology and regulation.”
As legislation governing AI in hiring becomes more common in California and across the country, Ronen says there are several best practices that HR leaders can implement as they deploy various AI technologies.
- Regularly perform adverse impact assessments. This can confirm that the use of AI in connection with employment process is not operating to favor or exclude groups, she says. “It is crucial to conduct these assessments not only at the initial implementation stage but also periodically to adapt to any emerging trends or changes in technology,” Ronen says.
- Develop notices to advise applicants or employees that AI is being used. It’s also important to disclose to applicants and employees how their data is being utilized within an AI-enabled program, Ronen explains.
- Ensure processes exist around requests for accommodations. Make sure to consider how AI-enabled hiring may impact individuals with disabilities, she says.
- Foster a culture of transparency. Ronen adds that, by focusing on ethical AI use, organizations can enhance trust and compliance.
“Remember that existing laws already prohibit discrimination, which include unintended discriminatory impacts that could result from the use of AI, so best practices around the use of AI in employment are important regardless of the outcome of the pending legislation,” Ronen says.
It’s crucial for HR leaders to stay proactive in implementing fair AI practices and continuously educating HR teams on these issues to help navigate the evolving landscape, she says.
