The adoption of artificial intelligence (AI) in the workplace is accelerating with an increasing number of employers integrating AI-related technologies into every stage of the employment lifecycle – from recruitment to separation. While these technologies offer employers opportunities to streamline certain processes and make others more objective, they also pose certain challenges and legal risks.

In a recent webinar, Kelley Drye Partners, Kimberly Carter and Katherine White, and General Counsel & Deputy Comptroller for Legal Affairs, NYC Office of the Comptroller, Justina K. Rivera, explored the current AI legal and regulatory landscape in the U.S. and the opportunities and challenges associated with using AI-related technologies in the employment context. In this blog post, we summarize the high-level takeaways from the session.

AI Legal and Regulatory Landscape in the U.S.

Currently, no federal law specifically regulates the use of AI-related technologies. However, in recent years, federal regulators, including the Equal Employment Opportunity Commission (EEOC) and the Department of Justice (DOJ), have taken certain steps that demonstrate that they have been (and will remain) focused on the use of AI in the workplace.

More notably, in April 2023, the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB), the DOJ’s Civil Rights Division, and the EEOC issued a joint statement noting that existing laws apply to the use of AI-related technologies and affirming that each agency/department will use its existing statutory authority to protect against unlawful discrimination in AI systems.

Moreover, in the absence of federal legislation regulating the use of AI-related technologies, certain state and local lawmakers have enacted laws that regulate the use of such tools in the employment context.

Illinois: In 2019, Illinois enacted the Artificial Intelligence Video Interview Act (effective January 1, 2020), which, among other things, requires an Illinois-based employer to provide notice and obtain a job applicant’s consent prior to using AI to analyze the applicant’s video interview and consider the applicant’s fitness for a position.
Maryland: In 2020, Maryland enacted House Bill 1202 (effective October 1, 2020), which prohibits a Maryland employer from using certain facial recognition services during an interview without the job applicant’s consent.
New York City: In 2021, New York City enacted the most expansive law in the U.S. regulating the use of AI in the employment context to date. Local Law 144 (effective January 1, 2023; enforceable July 5, 2023) prohibits a covered employer/employment agency from using an automated employment decision tool in hiring or promotion decisions unless: (1) the tool has been subject to an annual bias audit; and (2) the employer/employment agency has provided a notice to each job applicant or employee at least 10 business days prior to the use of the tool.

Several other states, including California, Massachusetts, New Jersey, and Vermont, are considering legislation that would also regulate AI in the workplace.

Putting It Into Practice

As federal, state, and local lawmakers and regulators continue to respond to the proliferation of AI-related technologies, an organization that is using these tools in the employment context should take certain steps to ensure legal compliance and help avoid regulatory scrutiny, including the following:

Assess current uses of AI-related technologies to determine whether any existing laws and regulations are applicable.

Conduct bias audits of AI-related technologies, including those provided by third-party vendors, to ensure that there is no disparate impact on protected classes (e.g., race, sex, disability, etc.).
Prepare and distribute required notices to job applicants and/or employees regarding the use of AI-related technologies and obtain required consents.
Ensure that the use of AI-related technologies is explainable and consider implementing a dispute process so that job applicants and/or employees can dispute and correct inaccurate information that may have contributed to an adverse employment decision.
Monitor developments and consult legal counsel to ensure that the organization is aware of proposed and recently enacted laws and regulations and meeting its obligations.

Big Brother & Biased Bots: Practical Considerations for Using AI in Employment Decision-Making