What California FEHA’s ADS regulations mean for HR Tech vendors and employers: scope, documentation, and compliance essentials.
On October 1, 2025, updates to California’s Fair Employment and Housing Act (FEHA) will take effect, creating one of the most comprehensive state-level frameworks for regulating AI in employment.
These rules impose direct responsibilities on both employers and HR Tech vendors who use Automated Decision Systems (ADS).
The new regulation also offers a glimpse into how choices made about testing employment decision-making systems, implementing AI or otherwise, can help, or hurt, a vendor or employer in the court.
FEHA defines Automated Decision Systems (ADS) as technology that makes or meaningfully influences employment-related decisions using algorithms or AI.
Examples of ADS in employment include:
The law prohibits discrimination across 18 protected characteristics in California employment law, including:
Under the amended FEHA, HR Tech vendors classified as ADS “developers” face new implications if their systems influence employment decisions.
While not prescriptive like NYC LL144, bias testing under FEHA is essentially a compliance ‘must,’ courts will treat a lack of testing as evidence of negligence.
Important note: The courts and regulators will treat the quality, scope, and recency of testing as central in deciding liability.
Vendors must retain testing results and system documentation for at least 4 years.
Vendors may be held jointly liable with employers if their ADS tools contribute to discriminatory outcomes.
Employers who deploy ADS systems must also adhere to strict compliance measures.
Employers must provide notice whenever an ADS tool is used to evaluate candidates or employees.
High-stakes employment decisions (such as hiring or termination) require human review and cannot rely solely on ADS tools.
Employers must implement “reasonable” safeguards to ensure their use of ADS does not result in unlawful discrimination.
Employers must retain relevant ADS documentation and bias testing results for 4 years.
Warden AI provides independent auditing and certification of AI employment systems, helping both vendors and employers prepare for compliance:
By partnering with Warden, HR Tech platforms and employers can build trust, transparency, and compliance into every stage of AI development and deployment.
Understand more about California’s FEHA law by joining our upcoming webinar with Maneesha Mithal, Partner at Wilson Sonsini (and former FTC Division Director).
We will be breaking down what these new FEHA rules mean in practice and how HR tech vendors and employers can prepare.
Sign up to join our webinar here.
