March 2024

As the use of artificial intelligence (AI) continues to explode, the California legislature is reacting by proposing legislation to regulate and reign in its use.  Legislators have proposed a host of new AI-based laws for 2024, and Assembly Bill (AB) 2930 may be the most impactful on employers. 

AB 2930 would provide prosecutors with authority to combat “algorithmic discrimination,” including in the workplace.  Prosecutors could use AB 2930 to bring civil actions against employers with significant consequences.  Algorithmic discrimination under the proposed statute is defined as:

The condition in which an automated decision tool contributes to unjustified differential treatment or impacts disfavoring people based on their actual or perceived race, color, ethnicity, sex, religion, age, national origin, limited English proficiency, disability, veteran status, genetic information, reproductive health, or any other classification protected by state law.

AB 2930 seeks to address the use of “automated decision tools” that make “consequential decisions” that may lead to algorithmic discrimination.  As it relates to employers, “consequential decisions” include matters such as pay, promotions, hiring, termination, or other matters that effecting the terms and conditions of employment.  Employers would also be required to disclose the use of automatic decision tools for consequential decisions and, if “technically feasible,” would allow employees and applicants to request alternative processes. 

One example that is often pointed regarding automated decision tools is their use to rank potential applicants for open positions.  One of the identified problems with these ranking systems is that they can lower an applicant’s ranking, or eliminate an applicant altogether, for gaps in applicant’s employment history.  If the gaps in employment were because of an applicant’s disability, however, the employer could be liable for discrimination for excluding the applicant based on their disability.

Even companies we assume to be tech savvy can face these issues.  Several years ago, there were multiple numerous reports that Amazon had attempted to automate is hiring practices by creating an algorithm that used the data from resumes of existing software engineers to review resumes of potential applicants.  The problem for Amazon was that the majority of its software engineers at the time were male.  The algorithm, therefore, favored resumes with terms commonly favored by male applicants, and discounted resumes that included terms such as “women’s” (for example, an applicant that may have listed that they played for a women’s basketball team).  To its credit, Amazon stopped using the algorithm when it determined it could not fix these flaws.

AB 2930 could lead to penalties of $25,000 per violation.  What constitutes a “violation,” however, is yet to be determined, but employers should be weary that it may be broadly interpreted.  For example, if an employer uses a violating algorithm for a job with 100 applicants, does this mean there were 100 potential violations? 

It should be noted that, regardless of AB 2930’s passage, use of algorithms that discriminate against applicants or employees likely violates numerous state and federal anti-discrimination laws.  Employers using AI for hiring or employment matters, therefore, should proceed with extreme caution. 

 

For more information contact:

Matthew Wallin

mwallin@gibbsgiden.com

(424) 317-4423

Matthew Wallin is a partner in the Los Angeles office where he practices labor and employment law.  He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.  

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