Artificial Intelligence in Hiring: A Double-Edged Sword

Originally Published in the Association of Corporate Counsel of Greater Philadelphia Newsletter
Q4 2022 Publications

For years, online job marketplaces have facilitated an influx of job seekers applying for open positions, giving employers more opportunities to find the best candidates for each role. Some businesses have struggled to keep pace with an overwhelming surge in applications, especially for roles that can be performed remotely. In response to the strain on resources posed by application review, business have begun relying on technology to streamline the hiring process. This includes using artificial intelligence (AI) to cull applications to a more manageable number, and even allowing AI to dictate hiring decisions 

This trend only accelerated during the pandemic, yet many businesses do not know enough about these tools and their potential flaws, raising the risk that they may be failing to comply with their existing and evolving legal obligations. The technical assistance document recently published by the U.S. Equal Employment Opportunity Commission (EEOC), and the New York City ordinance on AI in hiring that will become effective Jan. 1, 2023, are some of the early signs that lawmakers are increasingly paying attention to the use of these tools in employment. With diversity, equity and inclusion top of mind for many businesses, employees and investors, it is critical for employers to understand the tools they are using. “From a DEI perspective, it’s imperative that we consider the role AI plays in recruiting and retention,” said Armstrong Teasdale’s Vice President, Diversity, Equity and Inclusion Sonji Young. “This is not a concept that is unfamiliar, or going away, and as organizations look to grow, the management of candidates and the pipeline must be carefully and appropriately vetted.” Moreover, employers need to be aware of regulatory and legislative moves in these areas, so they can take steps to prevent AI from introducing bias into hiring decisions.

What is an AI hiring tool?

Generally, AI refers to “the capability of a machine to imitate intelligent human behavior,” such as  decision-making.  In the employment context, federal and state authorities have been defining the term broadly as systems such as machine learning, computer vision, intelligent decision support, and other computational processes used to assist or replace human decision making in the hiring process.

Scholars have cautioned that machine learning and other algorithmic tools are predicated on a fundamental flaw: AI learns from pre-existing behavior, which itself may be faulty.  AI systems trained on biased data from existing workplaces may be perpetuating the same imbalances or creating new ones, and may be doing so in violation of applicable law, by recreating employee populations with insufficient numbers of women, people of color, those with disabilities, and other marginalized groups.

As Armstrong Teasdale Chief Human Resources Officer Julie Paul has observed, “AI cannot be thoughtful about considering candidates who might not fall within bright-line criteria, yet may still be qualified. Those candidates will never be seen, because they will be screened out by the platform, and this creates not only missed opportunities, but liability for employers and hiring managers.” 

State and local lawmakers and federal regulators are currently wading into this area to remind employers about their existing legal obligations regarding fair hiring, and increasingly to impose new obligations specific to the technologies themselves.

The EEOC’s Technical Assistance Document

Last fall, the EEOC launched the Algorithmic Fairness Initiative to ensure that employers using AI in employment decisions comply with federal civil rights laws that the agency enforces. One result of this initiative is the EEOC’s May 12, 2022Technical Assistance Document (TAD), which addresses how Americans with Disabilities Act (ADA) requirements may apply to the use of AI in employment matters.  The TAD notes that while vendors creating AI tools may vet them for race, ethnicity and gender bias, these techniques may not address employers’ obligations not to discriminate against individuals with disabilities.  The EEOC cautions that “[i]f an employer or vendor were to try to reduce disability bias in the way” they do for other protected categories, this “would not mean that the algorithmic decision-making tool could never screen out an individual with a disability” because “[e]ach disability is unique.”

The TAD also provides recommendations on how employers can comply with the ADA, and addresses applicants who believe their rights may have been violated. In a noteworthy move, the EEOC lists—but does not mandate—various “promising practices” that employers could adopt to combat disability bias, such as asking the vendor of the algorithmic decision-making tool about its development, including whether the tool is attentive to applicants with disabilities. 

Vetting for bias on the basis of disability promises to be a complex process, and one in which vendors may not be prepared to invest.  While it remains unclear what weight, if any, these recommendations will be accorded by the courts or even the EEOC in the future, they provide key insights into the agency’s current views on employers’ expected conduct around AI use.

New Law for New York City Employers

New York City has taken a more proactive approach: starting Jan. 1, 2023, every business with employees in the city will be prohibited from using any computational processes that substantially assist or replace discretionary employment decision making (which the ordinance refers to as automated employment decision tools (AEDTs)) to screen employees or candidates for employment or promotion, unless the tool has undergone an independent bias audit no more than one year prior to its use and the employer has posted the results online.  An acceptable independent “bias audit” includes testing of the AEDTs to assess potential disparate impact on persons based on race, ethnicity, or sex. The law does not specify who qualifies as an “independent auditor,” but presumably it would not include an in-house expert or the vendor who created the assessment. Notably, the statute imposes penalties of $500 to $1,500 per day that the tool is in use in violation of the law.

Given the roughly 200,000 businesses operating in New York City, this law is poised to have a significant impact, yet despite the availability of recently published proposed regulations, its broad scope leaves many open questions.  It also remains unclear whether long-standing computer-based analyses derived from traditional testing validation strategies are covered by the law, or whether passive evaluation tools, such as recommendation engines used by employment firms, could fall within the scope of the law.

Looking Ahead

Businesses will no doubt continue to feel pressure to use AI and other tools to process employment applications efficiently, and other states and localities are likely to issue their own laws and regulations. In this complicated and evolving landscape, employers should proceed with caution to avoid potentially violating both existing anti-discrimination obligations and new rules targeted at these tools. 

“In any instance, we need to be mindful of the technology we are leveraging,” said Paul. “The increasingly competitive nature of the hiring market is such that many organizations have more candidates than they know what to do with, and being strategic in making hiring decisions is key.  But this should not be allowed to result in a failure to consider diversity and fairness in reviewing such candidates.”

Contact Us
  • Worldwide
  • Boston, MA
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
Worldwide
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
1980 Festival Plaza Drive, Suite 750
One Summerlin
Las Vegas, NV 89135
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1250
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
222 South Main St.
Suite 1830
Salt Lake City, UT 84101
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1050 Connecticut Avenue NW
Suite 500
Washington, DC 20036
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware