November 13, 2024
Newly proposed rules in California show the state taking more action to regulate AI tools and automated decision systems (ADS) in the workplace. For example, the California Civil Rights Division (CRD) recently updated proposed workplace AI rules. These updates address concerns about how employers use AI in hiring, promoting, and other employment decisions.
The most significant changes concern the definition of several key terms. For example, the CRD defined an ADS as “[A]ny system, including AI, machine learning, algorithms, statistics, and other data processing tools, that makes decisions or helps humans make decisions about employment benefits.” Employers may find this definition significantly broadens what qualifies as an ADS. This change is because it now includes systems that are not entirely automated. Now, the definition incorporates systems that influence human decision-making.
The CRD also redefined crucial terms to improve AI regulations further. One example includes the expanded definition of “agent.” This term now includes “[A]ny person acting on behalf of employers to carry out tasks that were traditionally an employer’s responsibility, such as recruiting, screening, hiring, promoting, and making decisions about pay, benefits, and leave.” As a result, third-party vendors utilizing AI to screen resumes or assist with hiring must also comply with applicable regulations.
The CRD defines “employment agency” as any entity paid to identify, screen, and procure job applicants or employees. However, the CRD did not define “screening,” which may lead to questions where third-party background check vendors fall into.
The revised rules emphasize the importance of preventing discrimination when using AI in criminal history screening. Companies must follow specific legal standards when making decisions about criminal history, such as only considering criminal history after making a conditional job offer. They must provide clear reports to applicants about their usage of AI, conduct regular anti-bias testing, and retain relevant data for four years.
The CRD will accept public comments on the revised rules until November 18, 2024. Concerned employers may take this opportunity to express any relevant thoughts on the new rules and if they may present a burden.
These revisions demonstrate California’s commitment to regulating AI in employment decisions. Companies should carefully consider how they use AI and ADS, especially during recruitment and criminal history checks. Employers should also ensure that third-party vendors they work with also comply with the CRD’s clarified regulations.
Disclaimer:
Information provided here is for educational and informational purposes only and should not constitute as legal advice. We recommend you contact your own legal counsel for any questions regarding your specific practices and compliance with applicable laws.