AI & Employment Law: Key Considerations

AI in HR: Automated Technology Tools

Algorithmic or automated HR tools in employment use predefined rules to run data through algorithms for various human resources functions. These tools range from simple rule-based formula systems to more advanced generative AI-powered technologies.

Generative AI systems learn from data, adapt, and make autonomous adjustments, unlike traditional algorithms that operate based on fixed instructions. Employers use these tools to automate and enhance HR functions.

AI Liability Risks

AI-driven workforce decisions are subject to employment laws, and employers face increasing agency investigations and lawsuits related to AI use in employment. Key legal frameworks address these issues.

Algorithmic Transparency and Accountability

A significant challenge is the lack of transparency in how algorithms make decisions. Generative AI systems operate as “black boxes,” making it difficult for employers to understand or defend decisions, creating legal risks. Without understanding how an algorithm reaches conclusions, defending against discrimination claims is difficult, potentially leading to regulatory action or legal liability.

Algorithmic systems generally apply the same formula consistently. However, generative AI systems involve greater complexity because judgments and standards change as the system learns. Decision-making for one candidate or employee will vary from decisions made at a different point in time.

Mitigating Legal Risks

Employers can take proactive steps to mitigate algorithmic bias and discrimination claims. Implementing routine audits under legal privilege is critical to ensuring AI is used legally. These audits may include monitoring algorithms for disparate impacts on protected groups.

If a hiring algorithm disproportionately screens out individuals in a protected group, employers may want to correct these biases before discrimination charges or lawsuits arise. Companies may want to undertake these privileged audits routinely (monthly, quarterly, etc.).

The AI landscape is rapidly evolving, so employers may want to track changing laws and regulations and implement policies and procedures for the safe, compliant, and nondiscriminatory use of AI in their workplace. Proactive analyses to evaluate AI tools for bias can reduce risk.

Ogletree Deakins’ Workforce Analytics and Compliance Practice Group offers guidance and legal recommendations for workforce issues, informed by data-driven compliance and risk assessment services. Our services encompass all stages of the employment life cycle, such as selections, career advancement, compensation and benefits, and retention, which enables employers to make informed decisions.

Ogletree Deakins is situated to provide tech employers and users (the “TECHPLACE™”) with labor and employment advice, compliance counseling, and litigation services that embrace innovation and mitigate legal risk. Through our Technology Practice Group, we support clients in the exploration, invention, and/or implementation of new and evolving technologies to navigate the unique and emerging labor and employment issues present in the workplace.

Ogletree Deakins’ employment lawyers are experienced in all aspects of employment law, from day-to-day advice to complex employment litigation.