Even just a few years ago, the concept of using artificial intelligence (AI) in everyday life was a novel, if somewhat intimidating, concept. But from Google’s AI overview to Microsoft’s Copilot, many of us use AI daily to help increase efficiency and streamline certain processes. If you are an employer using AI to sort through job applications and resumes, to make decisions based on background check information, or to sort through criteria for promotion or termination decisions, you need to consider the legal ramifications, which increasingly involve federal and state laws.
The State and Local Legal Landscape
Some state legislatures and local governments, in attempting to get ahead of any issues, have started considering or issuing guidance or legislation aimed at preventing employment discrimination resulting from the use of AI tools. For example, New Jersey has issued guidance indicating that the use of AI in employment decisions will be subject to the same antidiscrimination laws as non-AI decisions and that employers will be liable for discrimination caused by AI tools they did not design. Both Colorado and Illinois have passed laws, effective in 2026, prohibiting employers from using AI in a discriminatory manner and requiring certain disclosures when using AI in certain employment decisions. New York City passed a local law, effective July 2023, that regulates the use of AI in employment decisions. Maryland and California have proposed but have not yet passed AI legislation, and even more states are in the early stages of considering laws regulating employer use of AI in employment decisions.
Where Is the Federal Government on This Issue?
It is currently unlikely that federal legislation is forthcoming, although that could change in the years to come. In 2023 and 2024, the Equal Employment Opportunity Commission and the Department of Labor issued guidance on the use of AI in employment decisions. That guidance was rescinded following President Trump’s January 2025 executive order revoking policies and directives acting as “barriers” to “AI innovation.”
Now What?
While this is an evolving area, employers, especially those with remote employees across the United States, must keep up to date on state or local laws on the use of AI in employment decisions. As a general rule, make sure that any AI you are using complies with federal anti-discrimination laws. Other best practices include:
- Have a policy on if and how you are going to use AI;
- Vet your AI vendors and make sure they have considered the potential adverse impact of their products;
- Notify employees or prospective employees that you are using AI in employment decision- making;
- Regularly audit AI results to see if protected groups are being disproportionately impacted;
- Ensure employees responsible for implementing AI tools have the proper training and are using such tools appropriately; and
- Consult with subject matter experts and legal counsel as necessary.
