Many employers who seek to lower hiring costs and reduce potential discrimination claims have turned to artificial intelligence (AI) to locate talent, screen applicants, perform skills-based tests and even administer certain phases of the pre-hire interview process. While automating various aspects of the hiring process can eliminate the potential for intentional discrimination, discrimination can also occur when employers use tests or selection procedures that unintentionally exclude individuals based on one or more protected characteristics. This is known as “disparate impact” discrimination. Accordingly, if the use of AI inadvertently screens out individuals with physical or mental disabilities because of difficulties they may have with AI processes or if AI poses questions that may be more familiar to one race, sex or cultural group than another, this could result in illegal disparate impact discrimination.
Recent guidance from the Equal Employment Opportunity Commission (EEOC) confirms that rooting out AI-based discrimination is among its top strategic priorities. This guidance also confirms that when such discrimination occurs, the EEOC will hold the employer, not the AI vendor, responsible. Accordingly, employers can be liable for back pay, front pay, emotional distress, and other compensatory damages for using AI-enabled tools that result in unintentional or inadvertent discrimination.
To reduce risks associated with the use of AI tools in the hiring and performance management processes, employers should question AI vendors about the diversity and anti-bias mechanisms built into their products and make sure they understand what the AI products measure and how they measure it. Employers should also not only ask AI vendors about their performance statistics, but they should consider testing their company AI results annually. As an added protection, employers should include an indemnification provision in any contract with an AI vendor that protects the employer in case the vendor fails to design its AI in a manner that prevents actual and/or unintended bias.
To provide further help to employers interested in avoiding risks associated with the hiring process, the K&C Employment Team will be presenting a workshop on effective interviewing and hiring at the August 2, 2023, live showing of the 39th Annual Employment Law Update to be held at the Hampton Roads Convention Center.
FYI
Not only can over-reliance on AI in the hiring process create risk for employers, but cyber criminals are now using AI to help perpetrate scams against employers. For example, AI can effectively duplicate an executive’s voice on a phone call to HR requesting that a check be deposited in a specific account. Because of this developing cyber security risk, FBI Norfolk Assistant Special Agent in Charge, Jason Bilnoski, who oversees the office's Cyber program, will be the featured luncheon speaker at the August 2, 2023, seminar. Special Agent Bilnoski will provide attendees with an interesting view on the latest cyber scams with a goal of preparing HR professionals to safely deal with this developing workplace risk.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2026.
