Artificial intelligence is reshaping every stage of the employment relationship. This creates both tremendous opportunities and legal risk. Drawing on case law, regulatory guidance and real-world examples, this four-part series discusses different aspects of the HR world where AI is already creating legal exposure for employers and what HR professionals can do right now to get ahead of it. The best place to start is the recruiting and hiring stage.

Employers nationally have quickly adopted AI products throughout the hiring process. It is easy to see why: A recruiter facing thousands of applications for a single posting cannot meaningfully review every single one. AI tools can sort, rank, and surface the strongest candidates in seconds, all before any recruiter or human resources representative reviews an application.

The same technology can also widen a candidate pool. AI can surface qualified applicants who may have been missed by a keyword search and reduce the inconsistency created when different hiring managers apply their own unwritten standards to different stacks of resumes. AI does not simply make hiring faster; it can make hiring more consistent and predictable. On its face, this can look fairer than a purely human process riddled with its own unexamined biases.

AI is, however, only as smart as the rules a human builds into it. The uncomfortable truth about AI and its integration within the employment relationship is that employment law risk does not generally flow from a rogue algorithm taking a step an employer never intended. Instead, the risk comes from a hiring team using an AI system as part of its decision-making process but not completely understanding it.

AI hiring: A popular litigation target

AI hiring tools create the opportunity for expensive and damaging class actions. One such high-profile case, Mobley v. Workday, Inc., tests whether HR technology vendor Workday violated state and federal anti-discrimination law by creating an AI-powered applicant screening tool that discriminated on the basis of age and disability. The case remains in discovery after the Court granted preliminary collective certification, paving the way for potentially millions to join the collective action.

Similarly, in Kistler v. Eightfold AI Inc., another HR vendor is currently facing suit for allegedly acting as an unregistered consumer reporting agency, scraping data on more than 1 billion workers, and scoring applicants on a 0-to-5 “likelihood of success” scale, without making the requisite disclosures under the Fair Credit Reporting Act.

While the third-party vendor may create these screening tools, employers utilizing biased tools may also face liability. In Harper v. Sirius XM Radio, LLC, an employer faces multiple discrimination claims premised on its use of an AI system that allegedly evaluated candidates using data points functioning as unlawful proxies for race. If the Harper case teaches employers anything, it should be that using third-party vendor tools will not insulate them from litigation and, ultimately, liability.

AI does not eliminate accommodation needs

Overreliance on AI tools without human involvement creates particular exposure to claims of disability discrimination. This reality led the DOJ and EEOC to issue guidance in 2022 on how employers’ use of hiring technologies may violate the ADA. For example, a hiring tool built to predict “who will be a good employee” by comparing candidates to current successful staff can exclude people with disabilities, simply because these individuals were underrepresented in the “good employee” comparison pool.

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