California Governor Newsom Signs Law Boosting Transparency in AI Hiring Decisions
California Governor Gavin Newsom has signed SB 7, a new law that aims to increase transparency and protect workers' rights regarding the use of Automated Decision Systems (ADS) in employment decisions. The bill, which takes effect in 2026, requires employers to provide detailed notices and allow workers to appeal decisions made by these systems.
Before introducing an ADS, employers must now explain its intended use, internal logic, data collection methods, and other details to workers at least 30 days in advance. After using an ADS, employers must provide another written notice to affected workers and allow them to appeal and access relevant data.
The law prohibits employers from using ADS to make compensation decisions or predict worker beliefs, personality, or other behavioral characteristics. However, the bill defines an ADS broadly, potentially including basic software tools and spreadsheets, which has raised concerns about overreach.
SB 7 creates requirements that may duplicate or contradict those of the California Privacy Protection Agency under the CCPA. The California Labor Commissioner will enforce SB 7, and workers can bring claims against employers for violations and seek civil penalties.
Governor Newsom's signing of SB 7 marks a significant step in regulating the use of AI in employment decisions. While the law aims to increase transparency and protect workers' rights, its broad definition of ADS and potential conflicts with existing regulations may pose challenges for employers. The law will take effect in 2026, giving employers time to adapt to the new requirements.
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