Following the recent rulings regarding AI in hiring and concern for the role of auditors, which I touched on in the previous AI in the Workplace Series installment, California has issued a ruling that serves as a starting point for the state’s AI regulation efforts.
The California Supreme Court’s recent ruling can now hold AI developers and vendors liable for hiring practices that don’t comply with the Fair Employment and Housing Act (FEHA).
By expanding the definition of “employer” to these third parties, sole liability for discriminatory or faulty AI practices won’t just fall onto employers, but also the developers and vendors who designed and supplied the software.
Get an overview of the ruling, including new risks for business owners, implications for AI use in hiring, and expanded legal actions for employees.
And if you haven’t already be sure to visit other installments in this series so that you’re all caught up.
Court Widens Definition of “Employer”
The recent California Supreme Court ruling, which expands the definition of “employer” under the state’s Fair Employment and Housing Act (FEHA), is forecasted to have major implications for both employers and workers across the state.
By holding that third-party agents with at least five employees can be held liable for employment discrimination, the court has significantly increased the number of potential defendants in FEHA lawsuits.
This shift impacts businesses that use external contractors or staffing agencies, and may serve to shape California’s evolving regulations around AI tools.
Along with staffing agencies, other parties such as AI developers and vendors are also included under the new “employer” definition, putting them in the crosshairs of FEHA lawsuits regarding faulty AI hiring practices.
Employees will also see an impact, but in a more positive light, as the ruling provides certain protections that weren’t previously in place.
All in all, the California Supreme Court’s recent ruling is anticipated to have three major impacts:
Increased Risks for Companies Using Third-Party Agents
For employers and companies that rely on external agents for recruiting, hiring, or other HR functions, the risks are now far greater.
Under the expanded definition, these third parties can be named as co-defendants in discrimination, harassment, or retaliation cases brought by workers under FEHA.
Knowing this, it’s suggested that businesses immediately review relationships with any third-party staffing agencies that have five or more employees, and ensure strict compliance with FEHA regulations.
Policies, procedures, and training for external agents should also be reviewed to guarantee alignment with the law.
Implications for Use of AI in Hiring
The ruling also contained certain implications for the use of AI in employment decisions, which has become a growing concern in recent months.
As California considers laws to regulate AI bias and transparency in hiring tools, the expanded definition means AI developers and vendors with five or more employees could also now face liability under FEHA.
Employers using AI for screening or decision-making throughout the hiring process will need to vet these vendors, and review any algorithmic systems for potential discrimination.
Expanded Legal Actions for Workers
The ruling also affects workers, expanding opportunities to seek accountability from multiple parties in cases of discrimination.
Employees or applicants who believe they’ve experienced bias now have more routes to pursue legal action, including naming third-party agents alongside the employer.
Workers should consider consulting an attorney to determine liability, and to help navigate the complexities of the expanded “employer” definition.
This is the third installment of my AI in the Workplace Series. See the past two posts for information and insights into New York City’s Automated Employment Decision Tool law, as well as evolving AI hiring regulations and the role of AI auditors.
Experienced Employment & Title IX Mediator & ADR Professional
Twice-named a U.S. News Best Lawyer in America for employment and labor law, Angela Reddock-Wright is an employment, labor law & Title IX mediator and alternative dispute resolution professional. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing, and bullying issues. Furthermore, she’s been named a “Top 50 Woman Attorney” in California by Super Lawyers, a “Top California Employment Lawyer” by the Daily Journal, and one of Los Angeles’ “Most Influential Minority and Women Attorneys” by the Los Angeles Business Journal.
Angela is a regular legal and media commentator and analyst and has appeared on such media outlets as Good Morning America, Entertainment Tonight, Law and Crime with Brian Ross, Court TV, CNN, NewsNation, ABC News, CBS News, Fox 11 News, KTLA-5, the Black News Channel, Fox Soul – The Black Report, NPR, KPCC, Airtalk-89.3, KJLH Front Page with Dominique DiPrima, the New York Times, the Washington Post, the LA Times, Forbes.com, Yahoo! Entertainment, People Magazine, Essence Magazine, the Los Angeles Sentinel, LA Focus, Daily Journal, Our Weekly and the Wave Newspapers.
Angela is a member of the panel of distinguished mediators and arbitrators with Signature Resolution, a California dispute resolution company. She also owns her dispute resolution law firm, the Reddock Law Group of Los Angeles, specializing in the mediation and resolution of employment discrimination, harassment, retaliation, and other workplace claims, along with Title IX, sexual harassment, assault, and misconduct conduct cases, along with hazing and bullying cases in K-12 schools, colleges, and universities, fraternities, and sororities; fire, police and other public safety agencies and departments.
Be sure to follow me on Facebook and Instagram @iamangelareddockwright, LinkedIn at Linkedin.com/in/angelareddock, and tune in to my weekly radio show, KBLA Talk 1580’s Legal Lens with Angela Reddock-Wright each Saturday and Sunday at 11 am PST, or catch past episodes on Anchor.fm/Spotify. You can learn more about the radio show here – https://angelareddock-wright.com/radio-show/.
Also, learn more about my book – The Workplace Transformed: 7 Crucial Lessons from the Global Pandemic – here – https://angelareddock-wright.com/book/.
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For more information regarding resources mediation and dispute resolution resources for both employees and employers, connect with Angela on LinkedIn for new updates or contact her here. You may also follow her on Instagram.
This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.