What You Need to Know

• The California Supreme Court ruled that businesses that perform certain job-related functions for employers can be held directly liable for discrimination.
• The ruling will affect variety of industries, from AI vendors to recruiters and screeners.
• Outside counsel say they expect more litigation as a result.

California’s highest court has handed down a landmark ruling with major implications for the AI industry: making vendors that use algorithms to target job ads, screen out applicants or perform other employment-related tasks for other companies directly liable for discrimination under state law.

“The major impact of this is with outsourcing, and that’s what a lot of companies are doing for a lot of their employment-related functions,” said attorney Randy Erlewine of the San Francisco law firm Phillips, Erlewine, Given & Carlin.

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