02/07/2025

California Attorney General Issues Advisories on the Application California's Artificial Intelligence Law

Authored By: Stacey Shadden, Micah Carlson, and Allee Norvell (Law Clerk)

California Attorney General, Rob Bonta, issued two legal advisories on January 13, 2025 that offered clarification on the application of California law(s) to businesses, including use and sale of artificial intelligence (AI), and artificial intelligence in healthcare. AI continues to become more prevalent in businesses’ daily operations and decision-making processes, and these legal advisories clarify how existing laws apply to AI systems, reinforcing the importance of ethical and transparent practices.

The first advisory applies to the use of AI generally (AI Advisory). The AI Advisory advises consumers and businesses about rights and obligations under California’s consumer protection, civil rights, competition, and data privacy laws with respect to the use of AI. The second advisory is specific to healthcare entities (Healthcare AI Advisory). The Healthcare AI Advisory provides guidance about the healthcare entities’ obligations under CA law regarding the use of AI.

AI Advisory

The AI Advisory, “Application of Existing California Laws to Artificial Intelligence”, provides an overview of many existing California laws that may apply to businesses who develop, sell, or use AI including consumer protection, civil rights, competition, data protection laws, and election misinformation laws. These key points include:

• Bias and Discrimination: California’s anti-discrimination laws mandate that businesses provide equitable access and treatment regardless of race, gender, or other protected characteristics.
• Transparency: Businesses must disclose when AI tools are used in decisions that affect consumers’ rights or access to services.
• Privacy Compliance: AI applications must comply with state privacy laws (e.g., the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA)). These privacy laws require organizations to limit the collection and use of personal data, obtain consumer consent, and provide mechanisms for individuals to opt out of automated decision-making.

The AI Advisory also summarizes several new California AI laws that went into effect on January 1, 2025, including:

• Disclosure Requirements for Businesses,
• Unauthorized Use of Likeness,
• Use of AI in Election and Campaign Materials, and
• Prohibition and Reporting of Exploitative Uses of AI.

Healthcare AI Advisory

The Healthcare AI Advisory, “Application of Existing California Laws to Artificial Intelligence in Healthcare”, provides guidance specific to healthcare providers, insurers, vendors, investors, and other healthcare entities about their obligations with respect to their use of AI under California law, including:

• Patient Transparency: Healthcare providers are required to notify patients when AI technologies are used in diagnostic or treatment decisions.
• Testing and Validation: Rigorous testing and validation of AI systems are essential to prevent errors and reduce the likelihood of harm.
• Privacy Protections: AI systems used in healthcare must comply with the Confidentiality of Medical Information Act (CMIA) and the Health Insurance Portability and Accountability Act (HIPAA). These laws impose stringent requirements for safeguarding patient data and ensuring its secure use.

How Does This Impact Businesses?

The two legal advisories provide a roadmap for an organization seeking to align its practices with California’s existing laws. Based on the two advisories, the Attorney General’s recommendations include:

• Conduct Comprehensive Audits: Regularly review AI systems, and the process to develop them, to ensure they comply with applicable laws, including anti-discrimination, privacy, and transparency requirements.
• Implement Bias Mitigation Strategies: Use diverse datasets and robust testing protocols to identify and address potential biases in AI algorithms.
• Enhance Transparency Practices: Develop clear and accessible communication strategies to inform consumers and patients about the role of AI in decision-making processes.
• Train Employees: Provide training for staff on the ethical and legal implications of AI use, ensuring they understand their obligation under CA law.

If your business involves the sale or use of AI in California, you should begin to take the appropriate steps to ensure that you are in compliance with the existing California laws. Contact one of McGrath North’s privacy and compliance experts for all of your questions relating to California Attorney General’s legal advisories regarding AI.