This is the first in a series of three articles regarding AI in the workplace.
The integration of artificial intelligence (“AI”) into human resources operations presents both unprecedented opportunities and significant legal challenges. As AI technologies become increasingly sophisticated and accessible, businesses are deploying these tools across the employee lifecycle—from recruitment and hiring to performance monitoring and workplace surveillance. However, this technological evolution occurs within a complex and rapidly evolving legal landscape that demands careful consideration of compliance obligations, discrimination risks, and privacy concerns.
This guide explores two key areas where AI implementation intersects with employment law: workplace surveillance and hiring decisions. Understanding these legal implications is essential for business leaders seeking to harness AI’s benefits while mitigating potential liabilities and ensuring regulatory compliance.
Workplace Surveillance: Balancing Efficiency and Rights
AI-powered workplace surveillance technologies have transformed how employers monitor employee activities, productivity, and behavior. These systems can track everything from keystroke patterns and screen activity to facial expressions and voice patterns during video calls. While such technologies offer valuable insights into workplace efficiency and security, they raise significant legal concerns under both federal and state employment laws.
The primary legal framework governing workplace surveillance varies by jurisdiction, but several key principles apply broadly. Under the National Labor Relations Act, employees retain certain rights to organize and communicate about working conditions, which AI surveillance must not improperly restrict. Additionally, state privacy laws increasingly require employers to provide notice to employees about monitoring activities, with some states mandating specific consent procedures.
The Americans with Disabilities Act presents another crucial consideration. AI surveillance systems that monitor productivity, behavior, or physical attributes may inadvertently discriminate against employees with disabilities. For example, productivity monitoring software might penalize employees who work differently due to ADHD or other conditions, potentially creating disparate impact liability. Employers must ensure their AI systems can provide reasonable accommodations and do not create artificial barriers to employment for protected individuals.
Data protection and privacy laws add additional complexity. The California Consumer Privacy Act and similar state legislation may grant employees certain rights regarding personal information collected through AI surveillance. European companies or those with European employees must navigate the European Union’s General Data Protection Requirements, which impose strict limitations on employee monitoring and require clear legal bases for data processing.
From a practical standpoint, employers should implement clear policies governing AI surveillance, provide adequate notice to employees, and regularly audit their systems for potential discriminatory impacts.
AI in Hiring and Employment Decisions: Opportunity Meets Complexity
The use of AI in recruitment and hiring processes presents perhaps the most legally complex area of HR technology implementation. While AI can enhance efficiency and potentially reduce human bias in candidate selection, it also creates new forms of discrimination risk and regulatory scrutiny.
Federal anti-discrimination laws, including Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, apply fully to AI-driven hiring decisions. While previous guidance from the Equal Employment Opportunity Commission indicating that employers are liable for discriminatory outcomes produced by AI systems (regardless of whether the discrimination was intentional) has been removed from the EEOC website, employers are still obligated to not discriminate. Consequently, employers should conduct adverse impact analyses and validate their AI hiring tools to ensure they do not disproportionately exclude protected groups.
State and local governments have begun implementing specific regulations for AI in hiring. For example, New York City’s Local Law 144 requires employers using AI in hiring to conduct annual bias audits and make certain information publicly available. Similar legislation is emerging in other jurisdictions, creating a patchwork of compliance requirements that national employers must navigate.
The technical complexity of AI systems creates unique challenges for legal compliance. Many AI hiring tools operate as “black boxes,” making it difficult to understand how decisions are reached or to identify potential sources of bias. This opacity complicates traditional employment law defenses and may require organizations to invest in explainable AI technologies or maintain detailed documentation of their AI systems’ decision-making processes.
Reasonable accommodation requirements present additional considerations. AI screening tools must be designed to accommodate candidates with disabilities, such as providing alternative testing formats or allowing additional time for assessments. Failure to consider these accommodations during AI system design and implementation can result in ADA violations.
Conclusions
The intersection of artificial intelligence and employment law requires proactive legal strategy rather than reactive compliance. Organizations implementing AI in workplace surveillance must balance operational benefits against privacy rights, discrimination risks, and regulatory requirements. Similarly, AI hiring systems demand careful validation, ongoing monitoring, and robust accommodation procedures to ensure legal compliance.
Success in this evolving landscape requires collaboration between legal, HR, and technology teams to develop comprehensive AI governance frameworks. Regular legal audits, employee training, and system updates are essential components of responsible AI implementation. As legislation continues to evolve and enforcement agencies develop new guidance, organizations must remain vigilant in monitoring legal developments and adapting their practices accordingly.
The strategic deployment of AI in human resources can provide significant competitive advantages, but only when implemented with careful attention to legal compliance and risk management. By understanding these foundational legal principles and maintaining ongoing legal oversight, organizations can harness AI’s potential while protecting themselves against emerging liabilities in this rapidly evolving area of employment law.
Derek Schaffner is a partner in the Technology & Outsourcing practice group at The Boston-based law firm Conn Kavanaugh Rosenthal Peisch & Ford, LLP, Kathleen O’Toole is a partner in the Employment Litigation & Counseling practice group there as well.
They can be reached at dschaffner@connkavanaugh.com and kotoole@connkavanaugh.com, respectively.
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