AI in the Workplace: The New Legal Landscape Facing US Employers

Artificial Intelligence (AI) is rapidly altering the employment sector, automating tasks, improving efficiency, and enhancing decision-making. However, the use of AI is accompanied by concerns regarding potential biases, accuracy, and complex legal compliance issues. As AI’s influence continues to grow in the United States, increased government oversight has become a necessity to regulate its use in the workplace.

Employers are turning to AI for its potential to streamline processes and eliminate human bias, but this technology is not without risks. A poorly designed or trained AI tool can have significant discriminatory consequences, even if the algorithm ignores demographic data. Biased model inputs can also result in biased outputs, as the AI may improperly develop unrelated correlations and assumptions. There are also concerns about the potential for sensitive information leaks, the questionable protection of AI-generated creations as proprietary company property, and the impact of AI on employee development.

In response to these concerns, various government agencies have issued guidance, policies, and laws to govern the use of AI in the workplace. The White House, through the Office of Science and Technology Policy, released the Blueprint for an AI Bill of Rights in October 2022 and issued an executive order, titled the Safe, Secure, and Trustworthy Development and Use of AI in October 2023. These efforts aim to establish new standards for AI safety and security, protect privacy rights, and provide guidance for federal contractors using AI to mitigate discrimination.

Similarly, the Equal Employment Opportunity Commission (EEOC) has stepped up its enforcement of AI and machine learning-driven hiring tools, focusing on ensuring compliance with federal civil rights laws. State and local governments such as New York City, Colorado, and California have also adopted or are considering AI regulations. For example, the New York City AI Law makes it unlawful for employers to use AI without undergoing an independent bias audit and notifying candidates about its use. Colorado’s AI law aims to prevent algorithmic discrimination by requiring “high-risk artificial intelligence systems” users to implement a risk management policy, provide annual impact assessments, and notify employees when AI is used to make decisions about their employment.

Employers should prioritize transparency, prepare accommodation plans, develop AI usage policies, exercise caution when selecting AI vendors, validate results, and stay informed about AI legislation to mitigate legal risks. Staying up-to-date with laws and regulations will help ensure that AI tools are consistent with federal, state, and local laws and that policies and practices remain current with legal developments.

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