AI and the Hiring Process: What Employers Need to Know to Reduce Risk and Plan for Compliance

Table of Contents:

1. AI’s Transformative Impact and the Challenge of Regulation
2. Balancing the Benefits of AI Integration with a Plan for Compliance
3. The Pros and Cons of AI-Powered Hiring Tools
4. Current Regulation (or Lack Thereof) for AI in the Workplace
5. Staying Ahead of the Curve on AI-Related Employment Law

Artificial Intelligence (AI) is transforming the way companies do business. From the tech giants of Silicon Valley to small-town mom-and-pop shops, there isn’t an industry or area of work that hasn’t been affected in some way by the monumental rise of AI over the past few years.

AI has proliferated so fast, in fact, that regulators are left trying to keep up with the potential ramifications of removing the human element from so many areas of business. There are growing calls for increased regulation, but unsurprisingly, technology seems to be moving far faster than the laws that regulate its use. 

So where exactly does that leave employers when it comes to using AI effectively and responsibly in this “Wild West” era of limited oversight? And what can employers do to help protect themselves as new legislation regulating AI in the workplace is rolled out at different levels of government? 

As a Software as a Service company in the employment law and compliance space, we’ve been keeping an eye on the increasing use of AI in the workplace. We’re also looking at new and emerging legislation that regulate the use of AI by employers. 

There has been a particular interest by policymakers in regulating the use of AI to assist HR departments with their recruitment process and hiring decisions. More specifically, government leaders and legal experts are looking at areas where the use of AI during the hiring process might lead to potential bias and even discrimination or other unintentional risks. 

There are obvious advantages to using AI-powered tools to assist in hiring, including the ability to assess the qualifications of large pools of applicants quickly and accurately. This is a fact that isn’t lost on large employers. According to the American Civil Liberties Union (ACLU), 70 percent of employers and 99 percent of Fortune 500 companies were using AI in some way during the hiring process in 2023. 

However, that efficiency may come at a cost. Because AI learns and adapts based on existing data, there is growing concern that it may perpetuate existing discrimination rather than serve its intended use as an impartial decision maker. 

Last year, and for the first time in history, a sitting US president issued an executive order to ensure the responsible use of AI across the country, including new standards to “advance equity and civil rights.” 

According to a fact sheet released by the White House, part of the executive order’s initiative to protect workers includes a pledge to “Develop principles and best practices to mitigate the harms and maximize the benefits of AI for workers by addressing job displacement; labor standards; workplace equity, health, and safety; and data collection.” 

Despite these pledges and initiatives, there has been little in the way of actual legislation to regulate the use of AI in the workplace, especially when it comes to finding, screening, and hiring new employees. 

Only three jurisdictions have passed laws that regulate the use of AI during the hiring process. These include Illinois, Maryland, and New York City. 

This doesn’t mean that more legislation isn’t on the way, however. There are plenty of bills being introduced that address the use of AI in the workplace, including several bills at the federal level.

Employers should be proactive in preparing for and monitoring new and upcoming federal, state, county, and city laws that might affect the compliance of their locations. They should also consider implementing new policies that regulate the use of AI in the workplace, especially when it comes to making hiring decisions. 

This is an emerging area of employment law, one that warrants consideration and careful planning to reduce risk while also benefiting from the many useful tools that are powered by AI. 

We know that ensuring compliance only gets more complicated the larger your company grows. As technology progresses and workstyles evolve, it’s crucial that you have the tools you need to help safeguard your employment law compliance at every location, especially in the areas of labor law postings, minimum wage, and paid leave.

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