Artificial intelligence has quietly become part of how work gets done. Employees are using it to draft emails, summarize documents, build spreadsheets, and answer customer questions — often without anyone in management deciding that should happen. For employers, the question is no longer whether AI is in the workplace. It is whether it is being used on the company’s terms, with the right guardrails in place.

California has also moved quickly. New regulations now govern how employers can use AI in employment decisions, and existing confidentiality and privacy obligations apply to AI just as they apply to everything else. A clear, written AI policy is the most practical way to encourage productive use while managing the risks. Here are five reasons every California employer should have one.

1. New California regulations now govern AI in employment decisions

Effective October 1, 2025, the California Civil Rights Council adopted regulations under the Fair Employment and Housing Act (FEHA) addressing “automated-decision systems” (ADS) — broadly, any computational tool that makes or helps make employment decisions. (2 Cal. Code Regs., tit. 2, §§ 11008.1 et seq.)

The regulations confirm that using an AI tool to assist with hiring, screening, scheduling, evaluations, promotion, or discipline can violate California law if it produces discriminatory results — whether intentionally or through disparate impact — based on protected characteristics. Three points stand out for...

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