The California Fair Employment and Housing Council (FEHC) recently took a major step towards regulating the use of artificial intelligence (AI) and machine learning (ML) in connection with employment decision-making. On March 15, 2022, the FEHC published Draft Modifications to Employment Regulations Regarding Automated-Decision Systems, which specifically incorporate the use of "automated-decision systems" in existing rules regulating employment and hiring practices in California. The draft regulations seek to make unlawful the use of automated-decision systems that "screen out or tend to screen out" applicants or employees (or classes of applicants or employees) on the basis of a protected characteristic, unless shown to be job-related and consistent with business necessity. The draft regulations also contain significant and burdensome recordkeeping requirements. Before the proposed regulations take effect, they will be subject to a 45-day public comment period (which has not yet commenced) before FEHC can move toward a final rulemaking.

A statement from Equal Employment Opportunity Commission (EEOC) Chair Charlotte Burrows in late October 2021 announced the employment agency's launch of an initiative to ensure artificial intelligence (AI) and other emerging tools used in hiring and other employment decisions comply with federal civil rights laws. "The EEOC is keenly aware that [artificial intelligence and algorithmic decision-making] tools may mask and perpetuate bias or create new discriminatory barriers to jobs. We must work to ensure that these new technologies do not become a high-tech pathway to discrimination," Burrows said. The EEOC is not alone in its concerns about the use of AI, machine learning and related technologies in employment decision-making activities. On March 25, 2022, California's Fair Employment and Housing Council discussed draft regulations regarding automated-decision systems.

A newly proposed amendment to California's hiring discrimination laws would make AI-powered employment decision-making software a source of legal liability. The proposal would make it illegal for businesses and employment agencies to use automated-decision systems to screen out applicants who are considered a protected class by the California Department of Fair Employment and Housing. Broad language, however, means the law could be easily applied to "applications or systems that may only be tangentially related to employment decisions," lawyers Brent Hamilton and Jeffrey Bosley of Davis Wright Tremaine wrote. Automated-decision systems and algorithms, both fundamental to the law, are broadly defined in the draft, Hamilton and Bosley said. The lack of specificity means that technologies designed to aid human decision-making in small, subtle ways could end up being lumped together with hiring software, as could third-party vendors who provide the code.