ADMT Definitions & Concepts


The California Consumer Privacy Act (CCPA) now has detailed requirements for businesses that use automated decisionmaking technology (ADMT). Because the CCPA also applies to processing of personal information from California-based employees, contractors, and job applicants, these ADMT rules will apply more broadly than automated profiling rules from other states.

Here are some of the most important definitions and concepts from the CCPA’s rules covering ADMT.

Substantially Replacing Human Decisionmaking

ADMT is defined as “any technology that processes personal information and uses computation to replace human decisionmaking or substantially replace human decisionmaking.”

What does it mean to “substantially replace human decisionmaking”? This happens when a business uses the technology’s output to make a decision without human involvement. 

To qualify as human involvement, there must be a human reviewer who meets the following qualifications:

  1. Knows how to interpret and use the technology’s output to make the decision;
  2. Reviews and analyzes the output of the technology, and any other information that is relevant to make or change the decision; and
  3. Has the authority to make or change the decision based on their analysis.

The human reviewer must be involved as part of the process for every decision related to the technology in question before the decision is made, not as part of an appeals process that happens after the fact. 

Here are some examples.

  1. A business uses a resume-checking software to screen job applicants. The software automatically separates applicants into two groups: one group that merits further review by a human, and another group that is rejected. A human only becomes involved once this initial screening is completed. In this case, the software has replaced human decisionmaking, and is therefore considered ADMT.
  2. A business uses AI to review employees’ performance when evaluating their compensation. The AI generates a report summarizing its conclusions. Each report is reviewed by a supervisor, who takes it into consideration but is not required to follow its recommendations and may also consider information outside of the report. In this case, the use of AI is likely not considered AMDT because of the involvement of a human reviewer.

Significant Decision

The CCPA’s ADMT rules apply to its use for making “significant decisions.” This means decisions that result in the provision or denial of any of the following: 

  • Employment or independent contracting opportunities or compensation

    This includes hiring, promotion, demotions, suspension, and termination, as well as compensation, bonuses, and the assignment of work (if it affects compensation).

  • Financial or lending services

    The offering or denial of loans, financial accounts, payment plans, etc.

  • Housing

    For example, determining which applicant to rent an apartment to.

  • Education enrollment or opportunities

    Admission or acceptance into a program, educational credentials, and suspension or termination from a program.

  • Healthcare services

    Offering or denial of services related to the diagnosis, prevention, or treatment of a health condition, or the assessment or care of an individual's health.

Are You Required to Provide an Opt-Out?

In general, the CCPA requires businesses to offer consumers a way to opt-out of the use of ADMT for significant decisions. However, there are major exceptions to this rule. 

Businesses do not have to offer an opt-out for ADMT in the following situations.

1. You Have an Appeals Process

An opt-out is not required with respect to ADMT if the business provides a method to appeal the decision to a human reviewer who has the authority to overturn the decision. 

To qualify under this exception, the following conditions must be met:

  • The human reviewer must know how to interpret and use the output of the ADMT decision being appealed.
  • The human reviewer must consider any relevant information provided by the consumer, and may consider any other sources of information about the decision being appealed.
  • The human reviewer must have the authority to change the decision being appealed.
  • Clearly describe to the consumer how to submit an appeal and enable the consumer to provide information in support of their appeal.

2. Admission, Acceptance, or Hiring Decisions

The opt-out right does not apply to admission, acceptance, or hiring decisions, if these conditions are met:

  • The business uses the ADMT solely for the business’s assessment of the consumer’s ability to perform at work or in an educational program to determine whether to admit, accept, or hire them.
  • The ADMT works for the business’s purpose and does not unlawfully discriminate based upon protected characteristics.

3. Compensation Decisions and Assignment of Work

The ADMT opt-out right does not apply to the allocation/assignment of work or compensation decisions, if these conditions are met: 

  • The business uses the ADMT solely for the business’s allocation/assignment of work or compensation.
  • The ADMT works for the business’s purpose and does not unlawfully discriminate based upon protected characteristics.