As organizations increasingly adopt artificial intelligence (AI) in human resources (HR) to boost efficiency and streamline processes, potential legal risks also escalate, particularly those related to employment law violations. The convenience offered by AI in résumé reviews, employee evaluations, and training programs is undeniable, but businesses must remain vigilant against the inherent risks of AI-driven discrimination. Violations of Title VII of the Civil Rights Act of 1964 and the Fair Labor Standards Act (FLSA) can occur due to biases ingrained in AI algorithms or discrepancies in recorded work hours. Employers must ask themselves whether they are taking sufficient steps to mitigate these risks, as negligence could lead to severe legal repercussions.
AI-Driven Discrimination and Legal Implications
The use of AI tools designed to screen résumés often involves algorithms that match candidates against profiles of historically successful employees. If these past top-performers predominantly belong to a specific group, say males in engineering, the AI might inadvertently favor male candidates over female ones. This kind of bias can generate disparate impact discrimination, where qualified female applicants might be unfairly excluded based on gender indicators such as names or educational backgrounds. Such practices stand in violation of Title VII, which safeguards against employment discrimination based on race, color, religion, sex, and national origin.
Employers bear the legal responsibility for any Title VII violations stemming from AI tools, even when these tools are provided by external vendors. Following recent guidance issued by the Equal Employment Opportunity Commission (EEOC) on May 18, 2023, companies are now urged to scrutinize their AI vendors rigorously. Employers must query vendors about the preventive measures they implement to avoid discrimination. To assess compliance, one recommended measure is the four-fifths rule, which suggests potential discrimination if the selection rate for a protected group is less than 80% of that for the nonprotected group. Keeping these factors in check ensures that AI tools promote diversity and inclusivity rather than perpetuating existing biases.
Addressing Wage and Hour Violations with AI
In addition to discriminatory practices, AI in HR poses significant risks concerning wage and hour violations under the Fair Labor Standards Act (FLSA). The Department of Labor (DOL) has highlighted concerns that AI tools might inaccurately track working hours by solely monitoring active screen time. This can lead to the exclusion of off-computer work-related activities, ultimately causing underreporting of employees’ work hours. Some AI systems also incorrectly categorize all breaks as noncompensable or fail to account for work performed outside designated locations, potentially violating wage laws.
To circumvent these issues, employers should implement comprehensive reporting mechanisms that allow nonexempt employees to log hours not captured by AI systems. Adjustments to AI technology should be made to ensure accurate tracking of all worked hours. Moreover, businesses must remain attentive to any signs of wage discrepancies or unfair labor practices that could indicate AI’s limitations in hour reporting. Being proactive in addressing these challenges not only helps in maintaining compliance with FLSA but also fosters a fair working environment for employees.
Proactive Measures for Employers
Employers must implement comprehensive reporting mechanisms that allow nonexempt employees to log hours not captured by AI systems. Adjustments to AI technology should be made to ensure accurate tracking of all worked hours. Moreover, businesses must remain attentive to any signs of wage discrepancies or unfair labor practices that could indicate AI’s limitations in hour reporting. Proactive measures help maintain compliance with FLSA and create a fair working environment. Ensuring that AI systems are transparent and regularly audited can help reduce potential biases and safeguard against legal challenges. Businesses must prioritize these precautions to avoid severe repercussions.
