You Can Outsource the Hiring Tool. You Cannot Outsource the Discrimination Liability.

Since October 1, 2025, California’s Civil Rights Council regulations have treated many automated decision systems as part of the employer’s decision-making process under FEHA. Resume screeners, interview-scoring tools, “culture fit” assessments, and ad-targeting algorithms may all create risk if they contribute to a discriminatory outcome.

The regulations expressly apply to automated decision systems used in employment decisions, including third-party tools. That means “our software vendor handles that” is not much of a defense when the employer is relying on the tool to hire, promote, discipline, or terminate employees. Employers remain responsible for employment decisions even when a third-party vendor supplies the technology.

Two compliance issues deserve attention now.

First, recordkeeping. Employers generally must retain ADS-related records for at least four years. The same system that helps make employment decisions may also create the evidence used to challenge those decisions. This is consistent with my recommendation that all employee records be maintained for at least four years.

Second, anti-bias testing. The regulations specifically provide that evidence of anti-bias testing and other proactive efforts to avoid unlawful discrimination—and the absence of such evidence—may be relevant in determining whether an employer has engaged in unlawful discrimination. In practical terms, an employer that understands how its tools were tested, what was tested, and what corrective steps were taken starts the conversation from a much stronger position than an employer relying on a black box it cannot explain.

If your organization uses AI in recruiting, screening, promotion, or other employment decisions, take inventory of the tools, obtain the vendor’s testing information in writing, and evaluate whether your process would withstand a subpoena. Technology can improve efficiency. Used carelessly, it can also create risk.