15 Oct Balancing AI’s Benefits and Risks in Employment Decisions

Organizations are increasingly utilizing artificial intelligence (AI) in employment-related decisions. Although AI can offer several benefits, it also presents many challenges. AI is currently used in multiple aspects of employment decision-making, including recruitment, candidate screening, hiring, onboarding and performance evaluation. Businesses need to be aware of this technology’s benefits and risks before deciding to continue to utilize it.

Benefits and Risks of AI in Employment Decisions

Businesses implement AI in various ways. This tool offers several benefits, such as enhanced efficiency and time savings by automating repetitive tasks, improved objectivity by reducing bias through algorithms, and better decision-making through predictive insights from detailed reports. However, AI also presents risks, including biases and discrimination due to training on outdated or nondiverse data, lack of transparency in decision-making, and ethical concerns related to data utilization and storage.

Furthermore, businesses must also consider numerous laws and regulations when implementing AI in employment decisions. While federal laws such as Title VII of The Civil Rights Act and the Americans with Disabilities Act do not specifically address AI, they apply when AI systems lead to discriminatory outcomes based on protected characteristics, such as race, gender or disability. In addition, various countries, states and cities have enacted laws regulating the use of AI in employment decisions; for instance, Illinois, Maryland and New York City have laws regarding its use, and other jurisdictions are considering similar legislation. The Equal Employment Opportunity Commission also stated it prioritizes the enforcement of federal antidiscrimination laws in relation to AI, emphasizing the need for businesses to ensure that their AI systems are fair, transparent and compliant with existing regulations.

Strategies Businesses Can Implement to Reduce AI Risks and Mitigate Liability

To mitigate potential liability and reduce risks associated with AI use, employers can implement the following strategies:

• Follow applicable laws and regulations. Businesses must ensure they are permissibly using AI in employment-related decisions. To do this, it’s important to work with the AI vendor to understand its algorithm, consult with legal professionals about the applicable laws and regularly monitor the technology’s outputs for discriminatory results with procedures in place to correct them.
• Develop clear ethical guidelines. Internal policies should address appropriate AI use, detail consent procedures for job candidates and employees, and emphasize transparency and explainability of AI algorithms.
• Implement human oversight and intervention procedures. Human involvement in decision-making processes is essential to ensure the legal and proper functioning of AI technology.
• Ensure data quality to address biases. Since AI can perpetuate unlawful biases, the data inputted into the system must be accurate, relevant, diverse and complete. This can help the system return stronger and more compliant results.
• Audit and evaluate AI performance regularly. Like other systems, AI needs to be audited regularly to analyze its outputs. Corrections and adjustments can then be made to enhance its performance.

AI utilization in employment decision-making is increasing, but it presents various benefits and risks. Employers must be aware of the positives, negatives and legal concerns when incorporating this technology into their operations.

For more risk management guidance, contact us today.

Note:  Around 25% of organizations use AI for HR processes such as recruitment, hiring, performance evaluations and retention determinations, according to the Society for Human Resource Management.