California’s New AI Laws: What Business Owners Need to Know Right Now
If you’re running a business in California and using AI tools, a lot has changed in 2025, and you need to act fast. New laws will impact the way you run your business and remain compliant in the age of AI.
California isn’t just dipping its toes into AI regulation anymore. The state has rolled out serious new rules that could impact how you hire employees, make phone calls to customers, and even how you develop AI products. Some of these laws are already in effect, while others just got started as of July 1, 2025.
At Knez Law Group, LLP, our Riverside business lawyers know AI and employment law and will help you understand exactly what these changes mean for your specific situation. Our attorneys can review your current AI tools, help you comply with new requirements, and protect your business from costly violations.
The window to get compliant is closing fast. Don’t wait until you’re facing a lawsuit or regulatory investigation to figure out what you need to do.
AI Voice Calls
If your business makes automated calls to customers using AI-generated voices, you’re already under new regulations. AB 2905 kicked in on January 1, 2025, and it’s stricter than you might think.
The law requires clear disclosure when you use artificial voices. You can’t just have a robot call people and pretend it’s human. The disclosure must occur at the beginning of the call, and it must be clear enough that a reasonable person would understand they’re talking to an AI.
If you haven’t already, review every automated calling system you use. If you’re using AI voices for customer service, sales calls, or appointment reminders, you need to add proper disclosures now.
Employment and Hiring
The biggest change coming is how California will regulate AI in hiring and employment decisions. The Civil Rights Council’s new regulations will begin on October 1, 2025, and they change how businesses use AI tools for human resources.
These rules target automated decision-making systems that help with hiring, firing, promotion, and other employment decisions. If you use AI tools to screen resumes, conduct initial interviews, or evaluate employee performance, you need to test your AI systems for bias, provide transparency about how decisions are made, and give employees ways to challenge AI-driven decisions.
What Industries Are Most Affected
Some businesses face higher risks than others. If you’re in any of these industries, these new AI laws should be at the top of your priority list:
- Retail and E-commerce: Companies that use AI for customer service calls, automated marketing, or employee scheduling systems must review their compliance with both the voice call regulations and upcoming employment rules.
- Healthcare: Any medical practice that uses AI for patient communications or staff management faces additional scrutiny because of existing healthcare privacy laws combined with new AI regulations.
- Tech Companies: If you’re developing AI tools for other businesses, you could be liable for helping your clients violate these new laws. As a tech company, you are responsible for helping your customers remain compliant.
- Staffing and Recruiting: Companies that help other businesses hire employees are directly in the crosshairs of the new employment regulations. Your AI screening tools will need significant updates.
The Real Cost of Non-Compliance
The financial risks of ignoring these new AI laws are serious. California has a track record of aggressive enforcement when it comes to new technology regulations.
Beyond fines, you’re also looking at potential lawsuits from employees or customers who feel they were harmed by your AI systems. Employment discrimination lawsuits can cost hundreds of thousands of dollars, even if you win.
There’s also the business disruption factor. If regulators force you to stop using AI tools abruptly, can your business continue to operate effectively? Many companies have become so dependent on AI for basic operations that compliance is no longer optional.
What You Should Do Right Now
First, take inventory of every AI tool your business uses. This includes obvious things like chatbots and automated calling systems, but also less obvious AI features built into your software. Many businesses don’t realize how much AI they’re actually using.
Second, focus on immediate compliance needs. If you’re making automated calls with AI voices, get those disclosures added immediately. Don’t wait for a complaint or investigation to act.
When to Call a Riverside Business Lawyer
If you own a business in Riverside that uses AI technology, it is wise to discuss your situation with an experienced Riverside business attorney. At Knez Law Group, LLP, our business lawyers understand AI regulations and can help you create a compliance plan that fits your specific situation. They can also help you understand how these California laws interact with federal regulations and laws in other states where you do business.
Don’t try to handle this alone. AI laws are changing too quickly for most business owners to keep up with on their own. Getting legal advice now is much cheaper than dealing with violations later.
Knez Law Group, LLP serves business clients in the Inland Empire, Orange County, and Los Angeles. For help with a business law issue, contact us today or call us at 951-742-7681.
Andrew J. Knez earned his Bachelor of Arts degrees in Political Science and Criminal Justice from California State University, Fullerton. During his college years, he was a member of the Pi Kappa Phi Fraternity and interned at the College Legal Clinic, where he assisted underprivileged communities in obtaining affordable legal services. Mr. Knez credits this experience with fostering his appreciation for the law and its positive impact on society. Additionally, during college, Mr. Knez worked as a paralegal, gaining hands-on experience in civil litigation. Learn more here.