California Implements New Rules On Employers Using AI During Hiring Decisions
On October 1, 2025, California will implement new rules on Automated Decision Systems (ADS). These regulations will enforce strict compliance obligations on employers that use AI in hiring, promotions, evaluations, and other employment decisions, according to Holland & Hart.
This comes at a time when the federal court has authorized a nationwide class action against Workday, Inc., alleging that its AI hiring tools caused age discrimination. The lawsuit was filed in February 2023 by Derek Mobley, a Black, disabled man in his 40s, who claims that he applied for over 100 jobs without securing a role.
California’s new ruling
According to the regulations, any automated technology that significantly affects employment outcomes is subject to California’s Fair Employment and Housing Act (FEHA). Employers must:
- Ensure AI and algorithmic tools comply with FEHA’s anti-discrimination standards,
- Even if there is no intention to discriminate, take precautions against disparate impact
- Continue to be accountable for skewed outcomes from outside vendors who can be considered “agents” of the company.
- For four years, save the records of the bias audit, inputs, outputs, and decision logic.
- Build a possible affirmative defense by doing result monitoring and bias audits
Workday lawsuit
In Mobley v. Workday, a court permitted a collective action under the federal Age Discrimination in Employment Act (ADEA) to proceed, representing job applicants aged 40 and above.
Another plaintiff, Jill Hughes, said that she received automated rejections for hundreds of job applications “often received within a few hours of applying or at odd times outside of business hours,” as stated by court documents. Hughes claimed that this meant “a human did not review the applications.”
Judge Rita Lin allowed Mobley’s request for preliminary certification of collective action on the age discrimination claim, stating that applicants “are alike in the central way that matters: they were allegedly required to compete on unequal footing due to Workday’s discriminatory AI recommendations,” according to the order.
Workday continues to believe that this case is without merit. “This is a preliminary, procedural ruling at an early stage of this case that relies on allegations, not evidence,” it said in a statement to The Independent.
Image: Ewan Buck
