AI in Hiring: Litigation and Regulation Update

Artificial Intelligence (AI) is increasingly transforming the hiring landscape, offering employers innovative tools to streamline recruitment processes. However, the integration of AI into employment decisions has raised significant legal and regulatory concerns. This article provides a comprehensive overview of recent developments in AI-related litigation and regulations affecting hiring practices.

The Rise of AI in Hiring Practices

AI technologies have been adopted by numerous organizations to enhance efficiency in recruitment. These tools analyze vast amounts of data to identify suitable candidates, assess resumes, and even conduct initial interviews. While AI promises increased efficiency and objectivity, it also introduces challenges related to bias, transparency, and accountability.

Recent Litigation Involving AI in Hiring

Workday Inc. Lawsuit

In February 2024, Derek Mobley filed a class-action lawsuit against Workday Inc., alleging that the company's AI hiring tools discriminated against applicants based on race, age, and disability. The lawsuit claims that Workday's algorithms violated Title VII of the Civil Rights Act of 1964 and other federal laws. The case underscores the potential for AI systems to perpetuate existing biases in hiring processes.

EEOC Settlement

In August 2023, the Equal Employment Opportunity Commission (EEOC) settled a case against a tutoring company that used an AI tool to automatically reject older qualified candidates. The settlement, amounting to $365,000, highlights the EEOC's commitment to addressing discriminatory practices in AI-driven hiring decisions.

Regulatory Developments in AI Hiring

New York City's Local Law 144

Effective January 1, 2023, New York City implemented Local Law 144, requiring employers to disclose the use of Automated Employment Decision Tools (AEDTs) in hiring processes. Employers must conduct annual bias audits of these tools and make the results publicly available. This law aims to ensure transparency and accountability in AI-driven hiring decisions.

Illinois' Artificial Intelligence Video Interview Act

Illinois enacted the Artificial Intelligence Video Interview Act in 2022, mandating that employers obtain consent from applicants before recording and analyzing video interviews using AI. The law also requires employers to inform applicants about the specific traits or characteristics that the AI will assess during the interview.

California's Senate Bill 7 (SB 7)

California lawmakers introduced Senate Bill 7 (SB 7) to regulate the use of AI in the workplace. If passed, the bill would require human oversight of AI employment decisions, mandate transparency regarding AI use to employees, enforce regular auditing of Automated Decision Systems (ADS) tools, and prohibit certain sensitive personal information from being provided to ADS.

Challenges in Regulating AI in Hiring

Despite efforts to regulate AI in hiring, challenges persist. Resistance from tech companies, concerns about innovation, and the complexities of AI technology have hindered the implementation of comprehensive regulations. Additionally, the rapid evolution of AI technologies often outpaces legislative processes, creating gaps in existing laws.

Best Practices for Employers

To navigate the evolving landscape of AI in hiring, employers should consider the following best practices:

• Transparency: Clearly inform applicants about the use of AI in the hiring process and the specific criteria being evaluated.

• Bias Audits: Regularly conduct audits of AI tools to identify and mitigate potential biases.

• Compliance: Stay updated on federal, state, and local regulations related to AI in hiring to ensure compliance.

• Human Oversight: Maintain human oversight in decision-making processes to ensure fairness and accountability.

Conclusion

The integration of AI into hiring practices offers significant benefits but also presents legal and ethical challenges. Employers must proactively address these issues by adhering to regulatory requirements, implementing best practices, and fostering a culture of transparency and fairness in their recruitment processes.

For more detailed information on AI in hiring regulations and litigation, refer to the following resources:

• State AGs fill the AI regulatory void

• Artificial intelligence litigation in the crystal ball for 2025

• Attempts to regulate AI's hidden hand in Americans' lives flounder in US statehouses

• Workday accused of facilitating widespread bias in novel AI lawsuit

• NYC law promises to regulate AI in hiring, but leaves crucial gaps

• As Employers Rely on AI in the Workplace, Legislators and Plaintiffs Push Back

• States Scramble to Regulate AI-Based Hiring Tools

• 13 AI laws affecting hiring and recruitment around the world

• AI Employment Regulations Make Compliance ‘Very Complicated’

• AI in 2024: Monitoring New Regulation and Staying in Compliance With Existing Laws

• AI in HR: The Current Legal Landscape

• Null Compliance: NYC Local Law 144 and the Challenges of Algorithm Accountability

• Regulation of AI Hiring Tools Is a Work in Progress

• Comprehensive Review of AI Workplace Law and Litigation as We Enter 2025

• Artificial Intelligence in Hiring: Diverging Federal, State Perspectives on AI in Employment?

• Changing Rules Governing Artificial Intelligence in Employment

• AI in Hiring: Litigation and Regulation Update

By staying informed and proactive, employers can effectively integrate AI into their hiring processes while mitigating legal risks and promoting fair employment practices.