California SB 7 Implications for AI Recruitment: Potential Alterations in Background Verification Procedures
Revamped Article:
Due to recent court rulings, background checks for potential job candidates have become trickier, leaving employers scrambling to find alternative methods for assessing risk. In response, some businesses have turned to AI-assisted social media screening, but California's SB 7 might change that.
This new bill aims to enact regulations on Automated Decision Systems (ADS) in employment-prohibiting employers from using ADS to infer criminal or credit history, including through AI-powered social media screening tools. So, employers who rely on thorough background checks to make sound hiring decisions might need to rethink their approach to comply with this law.
What's an Automated Decision System?
SB 7 describes ADS as any system that uses machine learning, statistical modeling, data analytics, or artificial intelligence to generate actions impacting individuals, such as a score, classification, or recommendation. It's important to note that the bill doesn't consider common workplace technologies like spam email filters, antivirus software, or identity management tools as ADS.
New Accountability Measures for Employers
If SB 7 passes, employers using ADS in hiring or employment decisions will face new obligations. They'll need to provide written notice to employees at least 30 days before deploying the system, explaining how it works and its impact on employment decisions. Additionally, employers will be required to maintain a registry of all ADS tools they're using.
Apart from disclosure, the bill limits the use of AI in employment decisions. It prohibits employers from using ADS to determine sensitive characteristics, such as criminal history, immigration status, gender identity, political beliefs, or creditworthiness. Considering this, AI systems won't be allowed to analyze indirect data, like social media activity, employment gaps, or financial behavior, to draw conclusions about a candidate's background.
To ensure human involvement, employers will also need a human reviewer to evaluate the conclusions of any AI-driven system before making decisions.
A Closer Look at Employers Who Perform Background Checks
Given the hurdles in verifying criminal records, SB 7 could make the process even tougher. The case All of Us or None v. Hamrick has made it more challenging for background check providers to identify candidate records, due to prohibiting the display of key identifiers like date of birth or driver's license numbers in California court records.
While this decision aims to protect privacy, it creates obstructions for employers requesting background checks, particularly for candidates with common names. Employers may find it difficult to determine if a record belongs to the correct applicant, leading to increased risks or the necessity for alternative screening methods.
Filling the Gaps: AI Stepping In
With reliable criminal record checks becoming increasingly elusive, some employers have used AI-powered social media screening as an alternative risk assessment tool. These systems examine publicly available online content to identify potential concerns, such as violence, drug use, or financial irresponsibility.
However, SB 7 directly challenges this practice. Employers would no longer be allowed to use ADS tools to infer criminal or credit history from social media activity, even if the system doesn't explicitly recognize it. The prohibition might apply even when AI adopts proxy indicators, like discussions of past legal trouble, affiliations with specific groups, or posts mentioning financial hardship.
This spells significant implications for employers. Companies that once relied on AI insights to offset gaps in criminal record screening may soon find themselves without a legal basis to keep using these tools. Employers who have crafted AI-driven strategies for risk mitigation will need to reconsider their approach to steer clear of compliance pitfalls.
The Future Awaits: AI and Employment Decisions
California's SB 7 is part of a larger movement in AI regulation across the nation, with lawmakers focusing on reducing algorithmic bias and increasing transparency in hiring decisions. For employers, SB 7 likely presents more challenges than benefits.
On the one hand, it could increase hiring costs and slow down decision-making, necessitating more human oversight at various stages. On the other hand, while designed to promote fairness, it adds another layer of regulatory complexity, possibly constraining an employer's ability to assess candidate risk effectively. While the goal is to minimize bias, the impact of limiting AI tools on hiring fairness and efficiency remains to be seen.
To prepare for these changes, employers should:
- Evaluate AI-driven hiring tools to determine whether they rely on inferred characteristics rather than verifiable data.
- Review the use of AI in social media screening and pinpoint adjustments that'll reduce compliance risks.
- Prioritize developing compliance-focused AI strategies that prioritize transparency, risk mitigation, and legal requirements.
While AI continues to play a crucial role in the hiring process, SB 7 could signal a change in how employers integrate technology for screening. As regulations evolve, businesses must strike a balance between risk mitigation and compliance, ensuring decision-making remains both effective and legally defensible in our ever-evolving landscape.
- Lawmakers in California might soon require employers to provide written notice at least 30 days before deploying Automated Decision Systems (ADS) in hiring or employment decisions, detailing how the system works and its impact on employment decisions.
- If SB 7 passes, employers using ADS in employment decisions will not only be responsible for disclosing the system's operation but also maintaining a registry of all ADS tools they're using.
- AI-assisted social media screening tools, currently used by some businesses for risk assessment, might become obsolete in California due to SB 7, as it prohibits employers from using ADS to infer criminal or credit history from social media activity.
