California is considering a new law (Assembly Bill 331), also known as the Automated Decision Systems Accountability Act.  Modeled after the Biden Administration’s Blueprint for an AI Bill of Rights (whitehouse.gov), AB 331 would control the use of machine-based systems in making “consequential” employment decisions such as compensation, promotions, hiring, termination, and automated task allocations.

If passed and signed into law, AB 331 would impact employers who use AI, even through third-party vendors, in three major ways:

  1. Mandating Disclosure Before AI is Used

AB 331 would require companies to disclose not only their use of automated decision tools, but also explain their purpose and how AI is being used.  Where a consequential decision is being made solely on an automated decision tool, individuals may have the ability to opt out and request an alternative selection process or accommodation.

  1. Requiring Annual Impact Assessments

Under the proposed legislation, employers would have to conduct annual impact assessments to identify and mitigate potential biases in their AI systems.  The impact assessment would have to include a statement of purpose for the AI and its intended benefits, a summary of the data collected, the extent the tool is consistent with from the developer’s statement of use, an analysis of the potential adverse impact on protected categories (e.g., sex, race, or English proficiency), a description of the safeguards implemented to mitigate risk, and how the AI will be evaluated for validity or relevance.

The outcome of these impact assessments would have to be reported to the California Civil Rights Department (formerly known as the Department of Fair Employment and Housing).  Failure to do so could result in a $10,000 fine for every day AI is used and a company has not submitted the assessment.

  1. Allow Suits Against Employers for discriminatory impact of AI tools

The most recent proposed revisions to AB 331 also provide for a private right of action such that employees and applicants suffering a discriminatory impact on the basis of a protected category could file a lawsuit against companies using AI in their employment decisions.  Unsurprisingly, the bill would establish yet another one-sided attorneys’ fees award for prevailing plaintiffs, incentivizing individuals and their attorneys to bring lawsuits against California-based employers.

While the bill is still in the early stages of the legislative process and could face significant changes along the way (or even be scrapped altogether), as AI becomes more integrated into our everyday lives, employers should be prepared for laws like AB 331 to appear on the horizon with significant and complex restraints on employers in the coming years.  We’ll provide updates as they unfold.

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Photo of Tony Oncidi Tony Oncidi

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including…

Anthony J. Oncidi is the co-chair of the Labor & Employment Law Department and heads the West Coast Labor & Employment group in the firm’s Los Angeles office.

Tony represents employers and management in all aspects of labor relations and employment law, including litigation and preventive counseling, wage and hour matters, including class actions, wrongful termination, employee discipline, Title VII and the California Fair Employment and Housing Act, executive employment contract disputes, sexual harassment training and investigations, workplace violence, drug testing and privacy issues, Sarbanes-Oxley claims and employee raiding and trade secret protection. A substantial portion of Tony’s practice involves the defense of employers in large class actions, employment discrimination, harassment and wrongful termination litigation in state and federal court as well as arbitration proceedings, including FINRA matters.

Tony is recognized as a leading lawyer by such highly respected publications and organizations as the Los Angeles Daily JournalThe Hollywood Reporter, and Chambers USA, which gives him the highest possible rating (“Band 1”) for Labor & Employment.  According to Chambers USA, clients say Tony is “brilliant at what he does… He is even keeled, has a high emotional IQ, is a great legal writer and orator, and never gives up.” Other clients report:  “Tony has an outstanding reputation” and he is “smart, cost effective and appropriately aggressive.” Tony is hailed as “outstanding,” particularly for his “ability to merge top-shelf lawyerly advice with pragmatic business acumen.” He is highly respected in the industry, with other commentators lauding him as a “phenomenal strategist” and “one of the top employment litigators in the country.”

“Tony is the author of the treatise titled Employment Discrimination Depositions (Juris Pub’g 2020; www.jurispub.com), co-author of Proskauer on Privacy (PLI 2020), and, since 1990, has been a regular columnist for the official publication of the Labor and Employment Law Section of the State Bar of California and the Los Angeles Daily Journal.

Tony has been a featured guest on Fox 11 News and CBS News in Los Angeles. He has been interviewed and quoted by leading national media outlets such as The National Law JournalBloomberg News, The New York Times, and Newsweek and Time magazines. Tony is a frequent speaker on employment law topics for large and small groups of employers and their counsel, including the Society for Human Resource Management (“SHRM”), PIHRA, the National CLE Conference, National Business Institute, the Employment Round Table of Southern California (Board Member), the Council on Education in Management, the Institute for Corporate Counsel, the State Bar of California, the California Continuing Education of the Bar Program and the Los Angeles and Beverly Hills Bar Associations. He has testified as an expert witness regarding wage and hour issues as well as the California Fair Employment and Housing Act and has served as a faculty member of the National Employment Law Institute. He has served as an arbitrator in an employment discrimination matter.

Tony is an appointed Hearing Examiner for the Los Angeles Police Commission Board of Rights and has served as an Adjunct Professor of Law and a guest lecturer at USC Law School and a guest lecturer at UCLA Law School.

Photo of Sehreen Ladak Sehreen Ladak

Sehreen represents employers from a variety of industries in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, and breach of contract litigation, in both the single-plaintiff and class-action context. She also counsels clients in a wide…

Sehreen represents employers from a variety of industries in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, and breach of contract litigation, in both the single-plaintiff and class-action context. She also counsels clients in a wide range of labor and employment matters, including wage and hour issues, personnel policies and procedures, and employee discipline matters.

Sehreen earned her J.D. from USC Gould School of Law, where she was the Executive Submissions Editor of the Southern California Review of Law and Social Justice. During law school, she was also a student supervisor at the USC Immigration Clinic, and she served as a judicial extern to the Honorable Kathleen Mulligan in the U.S. Equal Opportunity Commission.