Artificial Intelligence (AI) – Is it a People Policy? (YES)

We used to say, “we have plenty of time to find out what other companies are doing,” and “there will be dozens of lawyers that will speak on the law and hand out templates.”  Those days were great! However, as we now know from today’s Supreme Court ruling where the highest Court “clawed back” what has been a 40 year “legal doctrine” that instructed judges to defer to agencies where the law is ambiguous. With this ruling, what is clear now? Get a lawyer and have them on speed dial.

In all seriousness, companies that used to read about a new law, and sit and wait – whether it was the ACA, Joint Employment, or the many other employer/employee laws, given the last year of Federal Agency rulings, that have been appealed, overturned, and then again overturned the “overturn” – it’s just not the time to sit back and wait until other big companies get a policy in place or change your processes to make your Company compliant.  The only consistent thing we can advise all companies to do is to meet the standards we know, as the excuse of “it’s expensive, and we are a small company” or “we don’t know AI attorneys” is not an excuse the Courts will hear. Instead the courts are focused on employee protections, and with AI’s use being new or newer to Judges as well, the likelihood of Courts ruling in favor of employers (unless the laws specifically address Employer exceptions or protections, which are not in the new laws yet), the burden is likely to be on employers as we’ve seen with the introduction of other technologies the past 40 years!

If you are familiar with the Assessment and Testing industry used in HR, when HR used Intelligence testing, personality testing, and employment experiences, there of course was a slew of lawyers suing those testing companies and the companies that used them – claiming the tests were biased and discriminatory and resulted in “adverse impact” in employment actions.

Having been Counsel for a large HR Consulting firm that invested these tests, we quickly found that psychology and statistics, and the science behind the Assessment and Testing did in fact correlate to better hiring, but nonetheless, the lawsuits ran rampant, and the lack or policies, procedures and training made the industry ripe for Plaintiff Attorneys to file Class Action lawsuits (the “Golden Goose” of law!!).

Now 40 years later, under the Colorado AI law, a person subject to an adverse employment action because of AI has the right to appeal the Company’s decision. Of course this is a new law, so how that appeal will work, who oversees the appeal, what a company will have to have to defend the appeal, all of these are unknown and will be developed through State laws and State Courts, and eventually Federal courts when various states have different laws and inconsistencies.

And of course – as AI is rapidly expanding and entering all industries, imagine an employee having a bad or even average performance review. Is that going to be appealed? How about not receiving a raise or promotion – might that be appealed as well?

Employers engaged in “high-risk” practices, such as rejecting a job applicant or firing someone based on information derived from AI, must take reasonable care to avoid algorithmic discrimination in the state, similar to what I saw back in the Assessment and Testing employee ERA.

What HR Can do Now (Draft Legal Policies!!)

Policies related to AI must be in place, and there must be a review of AI tools every year—a review conducted by a third party. Employers also need to give job applicants and employees notice that AI systems are being used. Small employers with fewer than 50 employees are exempt from some of the law’s provisions.

New York City has an AI bill as well – there hasn’t been much litigation under it, but more state AI laws are on the way, with ones expected in California and Washington state soon. Bills in both states would require:

  • Prohibiting AI discrimination
  • Annual audits
  • Notice that software is being used

If the Washington bill passes, it would take effect Jan. 1, 2025 (less than 6 months to get your policy and training, notices, and procedures in place!)

Best Practices

If you are using AI in your Company, as we are seeing and hearing (yes, it’s starting) from lawyers speaking about using AI:

  • Create and comply with HR policies
  • Train HR and managers
  • Conduct regular audits
  • Review to ensure vendor compliance
  • Make the policies and training part of onboarding new employees
  • Get consent from applicants and employees to use AI

As was the case with HR Testing, and then our use of company technology (Blackberrys) and all the required IT, HR should be front and center with this issue! Make sure your human resources policies and procedures, training as Employers can’t just hand off everything to AI software.

HR professionals should make sure to have OnDemand Access to experienced Employment Attorneys who are experienced in AI best practices, can customize a legally backed AI Policy, and can provide training for HR as well as practical notices to employees, vendors, and clients!

What we do know right now, sitting and “waiting” for more state laws to pass and more DIY templates to come from another webinar is no longer and excuse – as we know our friends (the Plaintiff Attorneys) representing employees are working that much harder than HR is to have policies drafted and training in place as we are now ½ way through 2024, with some States AI laws being effective and implemented in just 6 months!

For more information about protecting your company from the compliance risks of using AI in the workplace, we will be hosting a webinar on a date to be determined in August. You can pre-register here.

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