In recent years, the integration of advanced technologies, including artificial intelligence (AI), has seen a dramatic rise in areas such as hiring, performance evaluation, and compensation management. Employers are increasingly adopting AI for its ability to streamline processes, enhance precision, and reduce operational costs.
Despite its benefits, the use of AI also brings notable challenges, particularly regarding bias. While designed to optimize decision-making, they can inadvertently perpetuate discrimination against protected groups if they are not carefully managed. This issue is compounded by the fact that biases present in human-designed algorithms can become embedded in these systems.
Class Action Lawsuit
A recent class action lawsuit highlights these concerns. The case involved allegations that a company’s reliance on biased AI algorithms resulted in unfairly favoring candidates outside protected classes. Since the algorithms are created by people who may have unconscious biases, these prejudices can influence the algorithms and lead to discriminatory outcomes.
The resolution of this case, along with others like it, will be critical for shaping future legal standards for AI and its role in employment decisions. It will also impact the broader use of AI in the workplace.
Colorado AI Law
In a groundbreaking move, Colorado has become the first state to regulate AI usage with a new law aimed at mitigating algorithmic bias. Effective February 1, 2026, this legislation requires developers and users of high-risk AI systems to take proactive measures to prevent foreseeable biases. While not exclusively focused on employment, the law applies to these systems used in employment decisions and includes an exemption for small companies with fewer than fifty employees that do not use proprietary data for training their AI.
EEOC Actions
The Equal Employment Opportunity Commission (EEOC) is actively advancing its AI and Algorithmic Fairness Initiative to ensure that software used in hiring and employment decisions adhere to anti-discrimination laws. This initiative includes providing technical assistance and guidance on best practices for using AI in the workplace, conducting stakeholder meetings, and collecting data on how employment-related technologies affect decision-making processes. By focusing on these areas, the EEOC aims to closely monitor and address the influence of AI technologies on employment practices, ensuring that they remain equitable and compliant with federal equal employment opportunity regulations.
They have also issued guidance on how the Americans with Disabilities Act (ADA) applies to AI in the workplace. This guidance addresses potential disadvantages that AI tools may pose for job applicants and employees with disabilities. It offers best practices for ensuring ADA compliance and provides advice for both employers and individuals who believe their rights have been compromised.
As AI continues to be a valuable tool for improving efficiency and reducing costs, employers must remain vigilant about its implications. Understanding how these algorithms work and their potential for bias is crucial. Employers should stay updated on regulatory and legal changes in 2024 and beyond, ensuring that their AI systems comply with all relevant laws and avoid discriminatory practices.
Employer Guidance
Employers currently using AI in their operations should review and update their risk management practices to align with current and upcoming regulations. Recognize that these systems can reflect and amplify biases present in their development and data inputs. Conduct thorough legal reviews and stay informed about new regulations to mitigate risks and promote fairness. By proactively managing these aspects, employers can harness the benefits while safeguarding against potential discrimination and ensuring compliance.
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