Artificial intelligence (AI) software, programs, and systems are not new. But, as with other recent advances in technology, the law is racing to keep up or even catch up with the use of AI in the workplace. AI offers employers various opportunities for efficiencies and improvements in the workplace. AI can be used in recruiting and screening applicants as well as monitoring employee productivity or making employment decisions on compensation or separation. However, AI can pose potential risks to employers if the AI is inconsistent, biased, or unfair in use.

Back in 2021, U.S. Equal Employment Opportunity Commission (EEOC) Chair Charlotte A. Burrows launched an initiative regarding the use of software, including artificial intelligence (AI), machine learning, and other emerging technologies in hiring and other employment decisions to confirm these systems comply with the federal civil rights laws enforced by the EEOC. The EEOC has identified some examples of AI that could result in discrimination, including video interviewing software that analyzes an applicant’s ability to problem solve and scores individuals with disabilities lower due to speech patterns. The EEOC also issued guidance for employers to assess the adverse impact in using AI in employment hiring and selection procedures. In many cases, employers can be held responsible for the AI they use for hiring if that program results in an adverse impact to protected groups.

On October 30, 2023, President Biden issued Executive Order 14110 calling for a coordinated approach by the United States government to ensure the responsible and safe development and use of AI. This Executive Order required the Secretary of Labor to publish guidance for Federal contractors regarding non-discrimination in hiring involving AI and other technology-based hiring systems. The Office of Federal Contract Compliance Programs (OFCCP) developed a guide regarding the use of AI by federal contractors and subcontractors in the Equal Employment Opportunity context.

In 2024, several states have enacted laws to specifically address AI’s use in employment and many more have proposed and have pending legislation. Many of these proposed laws prohibit employers from using AI in a discriminatory manner and require notice, assessments, and review of the systems employers use. Two states, Colorado and Illinois, have enacted laws specifically directed to employers and requirements for the use of AI in the workplace.

Colorado Artificial Intelligence Act 

In May 2024, Colorado became the first state to enact wide-sweeping AI legislation that included obligations on both developers and deployers (i.e., users of AI) of high-risk AI to avoid algorithmic discrimination. Colorado’s Artificial Intelligence Act (CAIA) does not exclusively apply to employers, but it does apply to anyone using high-risk AI systems which can make, or assist in making employment-related decisions. Under CAIA, Colorado employers must also complete annual impact assessments, provide various notices to employees, and implement a risk-management policy and program.

Illinois HB 3773

On August 9, 2024, Illinois Governor J.B. Pritzker signed HB 3773, into law. HB 3773 amends the Illinois Human Rights Act to protect employees against discrimination from and requires transparency about, the use of AI in employment-related decisions.  An “employer” under HB 3773 is any person employing one or more employees within Illinois. HB 3773 prohibits an employer from using AI that results in subjecting employees to discrimination based on a protected class with respect to workplace decisions, such as recruitment, hiring, promotion, discharge, discipline, or other conditions of employment. HB 3773 specifically prohibits employers from using zip codes as a proxy for protected classes. Illinois employers must provide notice to their employees regarding any AI used to make, or which aided in making employment-related decisions.

Not to be outdone by Colorado, Illinois also has a pending bill HB 5322 that would impose similar reporting obligations and annual assessments for “deployers” of AI systems, which would include employers.

The takeaway here is that AI can provide a host of benefits, but employers have an obligation to ensure any AI they use in the workplace does not result in discrimination. While each state has not caught up with technology regarding AI-specific legislation, all employers should evaluate their use of any AI in the workplace to confirm it complies with any applicable employment-related federal and state laws or requirements. Employers should ensure these systems are fair, unbiased, and nondiscriminatory.

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