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Legislators in California are considering a bill that would regulate the Artificial Intelligence tools employers use to help make hiring and related decisions.

Assembly Bill 1018

California lawmakers are reviewing a proposed bill which would create regulations regarding the use of Artificial Intelligence (AI) that employers use to make hiring, promotional and related decisions. Assembly Bill 1018 (AB108) begins by defining AI as an “engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.”

AB108 specifies the rules it seeks to create are for consequential decisions, including those related to housing, education and employment. It says employers who utilize AI must:

• Allow consumers the right to opt out from the use of certain AI decisions.
• Inform employees and job seekers about whether a human reviews employment related documents before an AI-proposed decision is finalized.
• Offer a process for individuals to file appeals when adverse actions occur based on decisions which involved participation from AI.
• Initiate annual audits of their AI tools and disclose any concerns about potentially discriminatory code.
• Take on legal responsibilities that would typically be assigned to AI developers, if they choose to fine-tune their AI outside of its initial scope.
• Keep unredacted AI documentation for 10 years.
• Have at least one compliance officer who helps ensure the business complies with relevant AI Laws and reviews any complaints associated with AI based decisions.

Penalties For Non-Compliance

If AB108 is signed into law, then businesses in California will be required to comply. Assuming this happens, organizations that are found to be out of compliance may be fined up to $25,000 per violation by the State Attorney General, Civil Rights Department or Labor Commissioner.

The Reason For This Proposed Law

As the use of AI continues to grow, lawmakers are interested in taking steps to ensure it is not used in a way that inadvertently discriminates against consumers. Experts have suggested some automated decision-making tools include potentially discriminatory components. They are beginning to create laws to help prevent this from happening.

Complying With Employment Laws

Employers in California and throughout the nation must comply with employment laws that are in effect wherever they operate. We recommend having and maintaining written hiring and screening policies which cover the steps your employees must follow to adhere to these laws.

Backgrounds Online does not offer legal advice of any kind. We do, however, provide educational resources, like this blog, with information that can help hiring managers become aware of various new and upcoming laws.

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