California Wants to Control AI Use in Hiring

AI hiring law California- New laws may soon change how companies in California use artificial intelligence (AI) when hiring workers. A proposed law, Senate Bill 979 (SB 979), could go into effect on July 1, 2025. This law focuses on “automated decision tools” — software that helps employers screen, rank, or select job candidates.

Lawmakers say AI must not be unfair, especially when it affects people’s jobs. If passed, SB 979 would require companies to check their AI tools for bias. Companies would also need to share reports on how they use AI and how it affects hiring decisions.

What Is an Automated Decision Tool?

An automated decision tool is software that uses algorithms to make or help with decisions. In hiring, these tools can do things like:

• Review job applications
• Score resumes
• Conduct video interviews using facial recognition
• Choose which candidates move to the next step

These tools save time for businesses. But if they aren’t tested for fairness, they could hurt some groups of people more than others.

What Would the New Law Require?

SB 979 would create new rules for any person or company that uses an automated decision tool in California. The main goal is to prevent discrimination during hiring or employment decisions.

Here’s what the law would require:

Bias Audits

Each AI tool must go through a yearly “bias audit.” This audit checks whether the tool treats all job applicants fairly. The audit must:

• Review the tool’s performance with different races, genders, and other groups
• Be completed by an independent third party — not by the company that makes or uses the AI
• Be done once every year

Impact Reports – AI Hiring Law California

Companies must also create an “impact assessment” of their AI tools. This report must include:

• How the automated decision tool works
• What data it uses
• What decisions it helps make
• How often humans review its results

These reports must be kept on file for three years in case the government asks to review them.

Notice to People Affected by AI

If a business uses AI during a job application or employment decision, they must tell the person affected. The notice must include:

• A description of the tool being used
• The type of data it collects
• How the person can correct errors in their data

Notice must be given before or at the time the tool is used.

Who Would Be Affected By The AI Hiring Law California?

If passed, this law would apply to:

• Employers in California
• Vendors who sell or lease automated decision tools
• Developers who build AI hiring software

Even companies outside California could be affected if they use AI tools to hire or manage workers who live in California.

What Happens If Companies Don’t Follow the Law?

If a company breaks the law, the California Civil Rights Department can investigate. They may:

• Request copies of the audit and impact reports
• Require companies to stop using a biased tool
• Fine companies that do not provide proper notice to users or workers

Job applicants could also sue companies if they were harmed by an unfair tool. The law would give people the right to file private lawsuits in some cases.

Why Is California Doing This?

AI is growing fast. By 2024, many businesses already use it to speed up hiring. But AI systems are not always fair. Studies have found that some tools:

• Penalize people based on race or gender
• Score resumes lower just for using non-standard words
• Prefer people who live in certain zip codes

California wants to make sure workers are not hurt by bad or biased AI tools. Lawmakers believe transparency and testing are key to using AI safely.

How Is This Law Different From Others?

Other places have passed similar laws. For example:

New York City

• Requires bias audits for AI hiring tools
• Enforces rules starting July 2023

Illinois

• Regulates video interview software
• Requires companies to get consent and explain how software works

SB 979 is broader than both. It covers any tool that uses AI to help make a decision related to employment. It also includes more rules about data use, impact reports, and public transparency.

How Can Businesses Get Ready?

If your business uses AI for hiring or job decisions, now is the time to prepare. Here are steps companies can take:

• Review any tools that use AI or algorithms
• Ask vendors if their AI tools meet fairness and audit standards
• Create internal impact assessments starting now
• Set reminders to perform annual bias audits
• Build a process to notify job applicants when AI is used

Even if the law does not pass right away, these steps can protect your business and your employees.

When Would the Law Start?

If Senate Bill 979 passes, the law would first apply to tools used on or after July 1, 2025. That gives businesses time to:

• Understand the law
• Hire outside auditors
• Update how they use AI in hiring

Still, this timeline assumes the bill is approved in California’s legislative process. The law is not final yet. But many experts believe it has strong support.

Why This Matters – AI hiring law California

AI can make hiring faster, but it must be fair. People should not lose out on jobs because of a biased computer program. By setting standards, California hopes to make hiring more equal.

The new law would also give job seekers more control. They could learn when AI is used and fix any mistakes in their data. With clear audits and reports, both workers and businesses can understand what AI is doing.

(Source: https://www.callaborlaw.com/entry/new-ai-laws-may-go-into-effect-as-early-as-july-1-2025)

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