The California Supreme Court extended the definition of “employer” under the state’s main discrimination statute, the Fair Employment and Housing Act (FEHA), in a ruling issued earlier this week. This broadened interpretation not only broadens the number of potential defendants in a FEHA action, but it could also profoundly influence California’s growing measures to regulate the use of artificial intelligence (AI) in employment decisions.
As a consequence of this decision, more entities might potentially be considered as “employers,” hence establishing a larger spectrum for legal implications under the state’s primary anti-discrimination law, the FEHA. The expansion could potentially cover more entities under labor laws, including those who employ AI tools. This substantial inclusion may also increase the number of defendants implicated in a FEHA action. Additionally, AI is being routinely used in employment decisions such as recruitment, selection, and staffing. Consequently, the extension of the “employer” definition has raised questions about how liability for potential discrimination would be determined when AI systems are integrated into the decision-making processes of hiring and employment.
Employers should be aware of these developments, particularly those organizations that incorporate AI in any portion of their hiring or employment practices. The expanded “employer” definition underscores the importance of comprehensive, transparent, and non-discriminatory AI practices to ensure their implementation aligns with legal guidelines.
Maintaining fairness in AI systems is essential, particularly in evaluating factors such as qualifications or competency of a candidate, in an objective and non-discriminatory way. Companies would be well-advised to evaluate their use of AI, addressing any potential bias and ensuring that the systems are transparent and in compliance with legal standards.
Given the potential for wide-reaching ramifications in California and possibly further afield, it’s an issue that needs to be closely tracked. Legal departments, HR leaders, and decision-makers who incorporate or plan to incorporate AI systems into their strategic plans and operational tactics should stay alert about these recent developments and their potential legal consequences.
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