States continue to pass new laws around pre-employment drug testing, fair chance hiring, and the growing role of artificial intelligence in hiring. These laws come with changing requirements employers need to know to stay compliant. This guide rounds up the latest compliance updates in several states, with insights into how they may affect your background screening and hiring policies.
California: New AI Regulations Take Effect Soon
California has finalized regulations governing the use of artificial intelligence (AI) and other automated decision systems (ADS) in the hiring process. The new regulations take effect on Oct. 1.
The regulations are designed to prevent potential employment discrimination resulting from AI, algorithms, or ADS. They make it unlawful for employers to use ADS or selection criteria that discriminates against applicants based on protected characteristics, such as gender, race, and disability. The regulations also specify that employers need to retain ADS data for four years.
What California Employers Need to Know
All California employers using AI or automated decision tools should review these systems before October. ADS can include resume-screening software, computer-based assessments, and tools that analyze audio or video for facial expression, tone, and word choice.
Consider taking these steps to prepare for compliance with the new regulations:
- Audit automated decision systems for potential bias
- Vet vendors thoroughly and ask about their anti-bias policies
- Review your record-keeping procedures and make sure you’re preserving ADS records for the required four years
- Train your HR staff on the new AI regulations and how to comply with them fully
Texas: State Passes Bill to Regulate AI
The Texas governor has signed a bill to regulate the use of AI. The Texas Responsible Artificial Intelligence Governance Act (TRAIGA) will become law in January 2026.
TRAIGA makes it unlawful to develop or use an AI system with the intent to discriminate against a protected class. The law applies to any person or entity doing business in Texas, producing a product or service used by Texas residents, or developing or deploying an AI system in the state.
What Texas Employers Need to Know
For employers, the law prohibits intentionally discriminatory AI practices against any protected class under federal or state law, including race, national origin, age, and religion. Notably, TRAIGA focuses on intent, not disparate impact. That means the law may not apply to AI tools that unintentionally produce adverse outcomes.
Even so, you can take some steps to prepare before the new law takes effect. These include:
- Review AI systems, such as applicant tracking system (ATS) software, to make sure they don’t discriminate against protected groups
- Hold internal training for staff on how to use AI tools appropriately
- Require vendors to verify their AI tools don’t intentionally discriminate
Minnesota: Cannabis Law Expands Protections for Medical Marijuana Patients
In May, Minnesota updated a state cannabis law, expanding protections for people registered in the state’s medical marijuana program.
The new law requires employers to provide written notice to medical cannabis patients at least 14 days before taking an adverse action, such as denying or terminating employment. This notice requirement applies only when the action is based on the individual’s registry status or on a positive cannabis test. In the written notice, the employer must specify what federal law or regulation violation would occur if they didn’t take action.
What Minnesota Employers Need to Know
Minnesota already prohibits most employers from conducting pre-employment or routine cannabis drug screening. The new law applies to employers that can conduct cannabis testing under state or federal law, such as businesses hiring drivers, healthcare providers, or safety-sensitive positions.
Since the law has already gone into effect, you should immediately review your drug screening policy. Make sure to update adverse action procedures to include the 14-day written notice requirement. Additionally, you should train all HR staff and managers on the new requirements.
Minnesota isn’t the only state to make recent changes to its marijuana laws. Read more in last month’s compliance blog: Cannabis and Compliance: What Employers Should Know in Texas, Pennsylvania, and California
Iowa: State Amends Drug Testing Requirements for Employers
Iowa recently passed some amendments to its drug testing law, including how employers can provide written notices of positive test results.
Under the new law, employers can now deliver those written notices to employees by certified mail, in person, or electronically. The same options apply when sending required notices to applicants or parents of minor employees. Before, employers were limited to providing notices only by certified mail, return receipt requested.
What Iowa Employers Need to Know
Iowa’s new drug testing amendments went into effect on July 1. Take some time to ensure your policies comply with the new law. These steps may include:
- Update your drug testing policies to reflect the new written notification options
- Get consent from employees or applicants before sending electronic written notices
- Offer training to HR staff on the compliance changes
Read more in our comprehensive guide: An Employer Guide to Understanding Pre-Employment Drug Screening
California: Civil Rights Department Renews Scrutiny of Fair Chance Hiring
The California Fair Chance Act (CFCA) limits how and when employers can take criminal history into consideration during the hiring process. Recent reports suggest the California Civil Rights Department, which oversees the CFCA, has been enforcing the law more strictly, often siding with applicants over employers.
What California Employers Need to Know
If you’re responsible for hiring employees in California, it’s a good time to refresh your knowledge of the CFCA. Under the law, you cannot ask candidates about past convictions on job applications. You also can’t perform a background check on a candidate until you extend a conditional job offer.
Once you extend a conditional offer, you’re able to move forward with background screening. If an applicant’s criminal history causes you to reconsider the offer, you must take specific steps, including an individualized assessment. As part of this assessment, you should consider:
- The nature and gravity of the conviction or conduct
- The time passed since the conviction
- The nature of the job and specific duties
After the assessment, you can decide whether the offense disqualifies the candidate from working for your organization. If you choose to rescind the offer, you must complete these steps:
- Send a preliminary written notice listing the conviction(s), a copy of the background check report, and a statement giving the applicant a chance to respond.
- Give the applicant at least five business days to respond or at least 10 days if they choose to challenge the background check results.
- Do a reassessment if the candidate provides more information.
- Send a final written notice that states the decision, the process to challenge or appeal the decision, and the applicant’s right to file a complaint with the CRD.
If you don’t follow these requirements, you risk violating the CFCA, which can result in potential fines or legal challenges. Take some time to review your processes, including job postings, offer letters, and adverse action notices. The CRD also provides resources for employers to stay compliant with the CFCA.
Get more insights in our guide: The Criminal Background Check Assessment & Adverse
Stay Informed About Compliance Updates with InCheck
From Iowa to Texas to California, states are continually updating laws that affect employers’ screening and hiring policies. Staying updated on these changes can protect your organization from costly compliance mistakes.
At InCheck, we know it can be frustrating and time-consuming to navigate these changing requirements on your own. Our team offers clear, friendly guidance on changing regulations and what these new laws may mean for your business. Reach out today to learn how we can offer support to keep your screening policy compliant and up-to-date with the latest regulations.