# Civil Rights Council ADS employment regulations: Modifications to Employment Regulations Regarding Automated-Decision Systems (Fair Employment and Housing Act regulations, 2 CCR)

Source: https://www.bankingnewsai.com/ai-regulation/documents/ca-crc-ads-employment-regulations-2025
Last updated: Sep 1, 2026

Approved by the Office of Administrative Law and filed June 27, 2025, and in force since October 1, 2025, the Civil Rights Council's regulations state that using an automated-decision system that discriminates against applicants or employees on a basis protected by the Fair Employment and Housing Act is unlawful. They define ADS broadly (computational processes that make or facilitate employment decisions, including those derived from machine learning or AI), define proxies for protected characteristics, treat anti-bias testing and its results as relevant evidence, extend liability to third parties acting as the employer's agent, and require employers to keep ADS-related records for four years.

## At a glance

| Field | Value |
| --- | --- |
| Authority | [State of California](https://www.bankingnewsai.com/ai-regulation/california) |
| Type | Regulation |
| Status | In force |
| Published | Jun 27, 2025 |
| Effective | Oct 1, 2025 |
| Applies to | Employers with five or more employees, employment agencies and their agents — including vendors of hiring, screening and productivity tools — for any California applicant or employee |
| Official text | https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2025/06/Final-Text-regulations-automated-employment-decision-systems.pdf |

## Key points

- Applies to employers with five or more employees — every bank and credit union with California staff
- ADS covers résumé screening, assessments, targeting of job ads, video-interview analysis and any tool that makes or facilitates decisions on hiring, promotion, pay, discipline or termination
- Discriminatory ADS outcomes violate FEHA; the employer's anti-bias testing — its scope, quality, timing and response to results — is relevant evidence in any claim
- Vendors and other third parties can be liable as agents of the employer when they administer the ADS on its behalf
- Record retention for ADS data, inputs and outputs extended to four years
- Interacts with the CPPA's ADMT regulations, under which employment is a 'significant decision' subject to notice, opt-out or appeal, and access rights from January 1, 2027

## What changed for banks

For banks the immediate California AI exposure is in HR, not credit: GLBA keeps most lending data outside the CCPA, but hiring and promotion tools sit under both these FEHA regulations and the CPPA's ADMT rules. Vendor contracts, bias testing and four-year retention are now examinable compliance items.

## Use cases it governs

- [Third-party & vendor AI](https://www.bankingnewsai.com/ai-regulation/by-use-case#third-party-vendors)
- [Data & privacy](https://www.bankingnewsai.com/ai-regulation/by-use-case#data-privacy)
- [AI governance (general)](https://www.bankingnewsai.com/ai-regulation/by-use-case#governance-general)

## FAQ

### Do California's ADS employment regulations apply to banks?

Yes. They apply to any employer with five or more employees, with no financial-services exemption, and cover vendors acting as the employer's agent.

### Is bias testing mandatory under the regulations?

Not expressly — but the regulations make anti-bias testing and its results relevant evidence of whether the employer took reasonable steps, so its absence weighs against the employer in a claim.

## Related documents

- [SB 947](https://www.bankingnewsai.com/ai-regulation/documents/ca-sb-947-2026) — Employment: Automated Decision Systems (No Robo Bosses Act) (Sep 30, 2026)
- [AB 1609](https://www.bankingnewsai.com/ai-regulation/documents/ca-ab-1609-2026) — Customer Service Chatbots (Right to Human Customer Service Act) (Sep 28, 2026)
- [California SB 53 (Transparency in Frontier AI Act)](https://www.bankingnewsai.com/ai-regulation/documents/ca-sb-53-2025) — Senate Bill 53: Artificial intelligence models: large developers (Transparency in Frontier Artificial Intelligence Act), Chapter 138, Statutes of 2025 (Sep 29, 2025)
- [CPPA ADMT, risk-assessment and cybersecurity-audit regulations](https://www.bankingnewsai.com/ai-regulation/documents/ca-cppa-admt-risk-cyber-regulations-2025) — CCPA Updates, Cybersecurity Audits, Risk Assessments, Automated Decisionmaking Technology, and Insurance Companies — approved regulation text (11 CCR Division 6) (Sep 22, 2025)
- [California AG legal advisory on AI (Jan 2025)](https://www.bankingnewsai.com/ai-regulation/documents/ca-ag-legal-advisory-ai-2025) — Legal Advisory: Application of Existing California Laws to Artificial Intelligence (Jan 13, 2025)
- [Cal. Civ. Code §1798.145 (CCPA exemptions, incl. GLBA data)](https://www.bankingnewsai.com/ai-regulation/documents/ca-civil-code-1798-145) — California Consumer Privacy Act — exemptions, including the data-level exemption for information subject to the Gramm-Leach-Bliley Act and the California Financial Information Privacy Act (Civil Code §1798.145) (Jun 28, 2018)
- [FSB AI sound practices (final report, Oct 2026)](https://www.bankingnewsai.com/ai-regulation/documents/fsb-ai-sound-practices-2026) — Sound Practices for Responsible Adoption of Artificial Intelligence (AI): Final report (Oct 15, 2026)
- [OSFI 2026 Semi-Annual Risk Outlook](https://www.bankingnewsai.com/ai-regulation/documents/osfi-semi-annual-risk-outlook-2026) — 2026 Semi-Annual Risk Outlook (Oct 8, 2026)

Last reviewed Sep 1, 2026. Cite the official text (https://calcivilrights.ca.gov/wp-content/uploads/sites/32/2025/06/Final-Text-regulations-automated-employment-decision-systems.pdf) for the rule and this page for the summary and dates.

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