More businesses are using technology to help with hiring. A company may use software to screen resumes, rank applicants, administer online assessments, analyze interviews, or recommend which candidates should move forward.
Some business owners may not even think of these tools as artificial intelligence. They may simply be features included in recruiting or human resources software.
In California, however, the use of automated technology does not remove an employer’s responsibility to comply with employment discrimination laws. California regulations that took effect on October 1, 2025 specifically address the use of artificial intelligence and automated decision systems in employment.
For California business owners, the important question is no longer simply whether AI can be used in hiring. The more useful question is how the technology is being used and whether it could affect applicants in ways that create legal risk.
What Counts as an Automated Hiring System?
California’s regulations use the term “automated decision system” broadly. The rules can apply to computational systems that make decisions or help people make decisions concerning employment.
In the hiring context, this can include software that screens resumes for particular words or patterns, evaluates applicants through online tests, measures skills or personality traits, ranks candidates, or recommends applicants to an employer.
The regulations also address technology that analyzes an applicant’s facial expressions, word choices, or voice during an online interview.
This means a business does not need to be using a sophisticated AI program that actually selects the successful candidate. Technology that helps screen, rank, or recommend applicants may still fall within California’s regulatory framework.
Can a Business Use AI to Screen Resumes?
California does not generally prohibit employers from using automated systems to screen resumes or assist with hiring. The risk arises when the system results in unlawful discrimination.
For example, an automated screening tool may appear neutral because it applies the same criteria to every applicant. But if the criteria disproportionately screen out applicants based on a characteristic protected by California law, the employer may still face a discrimination claim.
The fact that a computer applied the criteria does not necessarily protect the employer.
This is particularly important because businesses may not know exactly how a third-party recruiting platform ranks applicants. An employer may see only the final score or recommendation without understanding which information produced that result.
Be Careful With Automated Tests and Assessments
Employers have used preemployment tests for years. AI has made these assessments significantly more sophisticated.
A hiring platform might measure how quickly an applicant answers questions, analyze responses to hypothetical situations, evaluate personality characteristics, or attempt to predict whether someone will perform well in a particular position.
California’s regulations specifically recognize that automated assessments can create legal issues.
One concern involves disability discrimination. A test or assessment that attempts to identify information concerning an applicant’s physical or mental condition may, depending on the circumstances, amount to an improper medical or disability-related inquiry.
Another concern is whether an assessment disadvantages a protected group even though the test itself appears neutral.
Employers should therefore understand what an automated assessment is actually measuring before making it an important part of the hiring process.
What About AI Video Interviews?
Some recruiting systems can analyze recorded or live video interviews. Depending on the technology, a system might evaluate an applicant’s words, tone of voice, speech patterns, facial expressions, or other characteristics.
California’s automated decision regulations specifically identify analysis of facial expression, word choice, and voice in online interviews as examples of technology that can fall within the rules.
For a business owner, this creates a practical question: what exactly is the software evaluating?
If a vendor cannot clearly explain what information is being analyzed and how it affects an applicant’s score, an employer should be cautious about relying heavily on that score.
Using a Third-Party Hiring Platform Does Not Eliminate the Employer’s Risk
Many small and midsized businesses do not develop their own hiring technology. They purchase recruiting software or use an outside service. That does not necessarily transfer the employer’s legal responsibilities to the technology company.
California’s regulations expressly address agents performing traditional employer functions such as recruiting, applicant screening, and hiring, including when those activities are performed through automated systems.
A business should therefore know whether its recruiting vendors use automated screening and how those systems affect the applicants presented to the employer. Simply saying that the software vendor made the recommendation may not answer a discrimination claim.
Businesses Should Keep Their Hiring Records
California’s regulations also address record retention. Covered employers and other entities generally must maintain employment records, including certain data created by automated decision systems, for at least four years.
That requirement can become important long after the hiring process is complete.
Suppose an unsuccessful applicant later claims that an automated screening system discriminated against them. The employer may need to determine what information the system considered, what score or recommendation it produced, and how the ultimate hiring decision was made. If those records no longer exist, defending the decision can become more difficult.
What Should California Business Owners Do?
Businesses do not need to stop using technology to make hiring more efficient. They should know what their technology is actually doing.
If your company uses recruiting software, an outside hiring platform, automated assessments, or AI-assisted applicant screening, consider finding out whether the system ranks or eliminates applicants, what information it considers, and whether a human reviews its recommendations.
Businesses should also maintain appropriate hiring records and periodically review whether automated screening criteria remain connected to legitimate requirements of the position.
The goal does not need to be eliminating technology from hiring. It should be making sure the business understands the technology well enough to remain responsible for the decisions being made in its name.
AI May Help With Hiring, But the Employer Still Bears the Risk
AI can make recruiting faster. It can help a business sort through hundreds of applications and identify candidates who might otherwise be overlooked. But automation can also make a problematic hiring practice much easier to repeat.
California’s current approach reflects a fairly simple principle. Employers can use technology to assist with hiring, but existing employment protections continue to apply when that technology affects who gets an opportunity to work.
For business owners, knowing how a hiring system reaches its recommendations may become just as important as knowing what questions are being asked during the interview.
Related practice areas: Executive-Related Disputes · Civil Litigation