Don’t Let AI Put Your Agency at Risk—FEHA Compliance in Hiring Explained

Artificial intelligence (AI) and other automated decision systems (ADS) are becoming more common in public sector hiring. Resume screeners, video interview platforms, and other algorithmic tools promise efficiency—but they also bring legal risk.

Starting October 1, 2025, new regulations under the Fair Employment and Housing Act (FEHA) will go into effect. These rules clarify how FEHA applies to AI and ADS in employment decisions, with the goal of preventing discrimination.

The Legal Framework: FEHA and Automated Decision Systems

FEHA prohibits employment discrimination on the basis of protected characteristics such as race, gender, age, disability, religion, and more. The new regulations make clear that this prohibition extends to AI and ADS tools used in hiring, promotion, and other employment decisions.

Key points include:

• Disparate impact counts: Even if bias is unintentional, employers can be liable if an ADS disproportionately excludes a protected group.
• Examples of risk: Tools that screen applicants by schedule availability, assess reaction times, or analyze speech or facial expressions in virtual interviews, may disadvantage individuals with disabilities, religious obligations, or language differences.
• Pre-employment inquiries: Pre-employment inquiries limits under FEHA also apply to inquiries made through ADS.
• Liability extends to agents: If an outside vendor or recruitment partner uses a discriminatory ADS on your behalf, your agency is still responsible under FEHA.
• Recordkeeping required: Employers must retain records of ADS use—including data, selection criteria, and employment decisions—for at least four years.
• Bias testing is encouraged: While not mandatory, anti-bias testing and proactive efforts, such as self-auditing, can support a defense if a claim arises. Recency, scope, and quality of such efforts will be considered.

You can view the full regulations through the California Civil Rights Council’s official announcement here.

Why This Matters for Public Agencies

Public agencies face unique scrutiny in hiring because of the expectation of fairness and transparency in government employment. These new rules emphasize that automated tools are subject to the same anti-discrimination standards as human decision-makers.

Agencies must balance the benefits of efficiency with the obligation to maintain equal opportunity. Failure to comply could result in litigation, reputational harm, and reduced public trust.

Practical Steps Toward Compliance

Agencies can continue to use AI and ADS technology in hiring, but steps should be taken to ensure compliance with FEHA.

1. Inventory and Assess AI Tools

• List all automated tools used in recruitment, hiring, and decisions regarding pay, benefits, or leave.
• Determine whether each tool directly or indirectly screens candidates.

2. Audit for Bias

• Test for disparate impact on protected groups.
• Request documentation from vendors showing validation studies and fairness testing.

3. Update Policies and Vendor Contracts

• Require vendors to certify FEHA compliance.
• Ensure contracts include shared responsibility for compliance.
• Clarify that human review supplements automated results.

4. Strengthen Recordkeeping

• Retain ADS-related records for at least four years, including data, selection criteria, and outcomes.
• Document all compliance steps to establish a paper trail of diligence.

5. Train HR and Hiring Teams

• Educate staff about the limitations and risks of AI hiring tools.
• Provide guidance on recognizing and addressing potential bias.

6. Provide Transparency and Accessibility

• Ensure accessible processes for individuals with disabilities.
• Offer accommodations or alternative application methods when needed; this includes both disability-related and religious accommodations.

AI and automated decision systems will continue to shape the future of hiring, but compliance with FEHA remains essential. Please reach out to your trusted legal counsel if your agency needs assistance in navigating the new FEHA regulations.