Employers don’t have to build the AI algorithm to own the liability

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Tara Humma is a partner at Rimon Law, where she focuses her practice on labor and employment matters.

Businesses have quickly embedded artificial intelligence in workplace decision-making for fear of being left behind. Employers are routinely using AI tools to screen applicants or resumes, analyze interviews, monitor employee productivity and make promotional or disciplinary decisions.

Some companies and HR leaders assume legal risk lies with the software vendor that created or licensed the tools, but this is not the case in many situations. Just like with any other tool used by businesses, the employer may own the liability for decisions made with AI assistance, even if the technology was purchased or licensed from a vendor.

Tara Humma

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Many states are increasing scrutiny of AI-driven employment decisions, and we can anticipate more state action ahead. That’s especially true given the current administration’s position on enforcement of disparate impact claims, including the rescission of specific AI guidance issued by the U. S. Equal Employment Opportunity Commission in prior years.

The federal approach

Under the Biden administration, EEOC issued guidance related to employers’ use of AI in making employment decisions. That guidance cautioned employers and raised concerns about disparate impact discrimination, disability discrimination, lack of transparency in using AI tools, biased training data and a potential for lack of human oversight. It also made clear that employers could still be liable for discrimination that occurred with tools that were developed and purchased from third parties, even without an intent to…

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