AI in Hiring: Legal & Regulatory Updates

Artificial Intelligence (AI) has transformed employment decision-making, impacting recruitment, evaluation, and management. AI tools screen applications, assess performance, and suggest discipline or termination, saving time and money. Despite the perception of impartiality, AI is susceptible to bias, leading to legal issues when automated decision systems (ADS) are not properly monitored.

Government & Private Litigation

Recent state and federal court cases, along with EEOC and California Civil Rights Division (“CRD”) enforcement, highlight AI's potential flaws. In 2023, the EEOC settled a complaint for $365,000 against a company using ADS, alleging disparate impact on applicants, specifically women over 55 and men over 60. A federal lawsuit against Workday, Inc. makes similar claims; Derek Mobley alleges age discrimination (40+) by Workday’s AI hiring tool. This case was recently allowed to proceed as a nationwide class action. Mobley’s lawsuit shows that private litigation can be used against companies, regardless of any changes made by the federal government.

Efforts to Regulate AI

Over the past year, agencies like the Department of Labor (“DOL”), EEOC, CRD, and the California legislature have started creating employer guidance, enacting enforcement, and drafting bills to address AI ADS issues. CDF Labor Law is tracking these developments and providing updated guidance for employers. California lawmakers introduced Senate Bill 7 (SB 7) to regulate AI in the workplace and limit ADS in employment decisions. If passed, SB 7 would require human oversight of AI employment decisions, mandate transparency to employees about AI use, enforce regular ADS audits, and prohibit providing certain sensitive personal information to the ADS. These changes would affect how companies use ADS and their associated risks. CDF will monitor SB 7 and provide updates.

Employer Considerations

While AI offers efficiency, it requires monitoring. Employers should audit systems, stay informed on regulations, and ensure compliance to lower legal risks. CDF Labor Law can assist employers in navigating AI regulation developments and ensuring compliance with California employment laws. ContactRyan Laroccaor your preferredCDF attorneyfor a consultation to prepare your business for developments in AI regulation, and to ensure compliance with California employment laws.

For over 30 years, CDF has operated as an employment, labor, and immigration firm in California, representing employers in lawsuits and advising on legal compliance and risk avoidance. CDF has five locations from Sacramento to San Diego.
San Diego Associate Attorney. Taylor has experience defending employers of all sizes in employment-related claims regarding wrongful termination, discrimination, harassment, retaliation, and employment-related tort and contract claims. Taylor also has experience defending management in wage and hour class actions and PAGA representative actions. Taylor is a member of the Lawyers Club of San Diego and received her Juris Doctor from the University of San Diego School of Law, where she was a member of the Student Bar Association, Employment and Labor Law Society, Business Law Society, and Women’s Law Caucus.