HR Alert: EEOC Offers Guidance on the use of AI During the Hiring Process

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As we reported earlier in May, Artificial Intelligence (AI) tools are continuously developing and have entered the workplace. AI is here to stay – to learn more about the basics of AI, we invite you to read our prior blog post.

The increased use of AI tools within the workplace prompted the U.S. Equal Employment Opportunity Commission (EEOC) to explore the use of AI tools in the employment selection process – hiring, advancing, and making employment decisions for employees. Under Title VII of the Civil Rights Act of 1964 (Title VII) employers can’t use decision-making procedures or AI tools that cause disproportionality-large negative effects on the basis of an applicant’s status in a protect group such as race, color, religion, sex, or national origin.

Title VII applies to the use of decision-making tools.  Employers are using AI tools to increase efficiency within workplace procedures. That’s just sensible.

In response, though, the EEOC has clarified that if an algorithmic or AI decision-making tool is being used to decide whether to hire, promote, terminate, or take a similar action, it’s considered a selection procedure under Title VII guidelines. This means that employers need to assess whether the use of this tool is having an adverse impact on a protected group. If there’s an adverse impact on an individual because of their membership to a protected group, the tool’s use violates Title VII unless the employer can show the use is “job related and consistent with business necessity.”

Employers may be held responsible for the adverse impact a procedure had even if the tool was developed by an outside vendor. Moreover, employers may be responsible for the actions of any agents – read: employment agencies – that have been authorized to act on their behalf. It’s up to the employer to speak with its vendors or administers to ensure that they’ve evaluated whether the tool results in an adverse impact for protected individuals. Employers may still be liable even if the vendor was incorrect in its assessment of the tool’s impact.

How to determine if there’s an adverse impact? The Title VII guidelines instruct employers to review their selection rates. This rate refers to the proportion of applicants/employees who are hired, promoted, or otherwise selected. This rate is calculated by dividing the total numbers of persons hired or promoted from the protected group by total number of candidates from this group.

The four-fifths rule is a rule of thumb established by Title VII guidelines to determine if a selection rate for one group is “substantially different” from the rate of another group. This means if the ratio of the two rates is less than four-fifths (or 80%) there’s a substantial difference in the selection between these two groups. Because this is a general rule of thumb, compliance with it doesn’t automatically mean that a selection process isn’t in violation of Title VII. Just as employers shouldn’t blindly rely on AI, employers shouldn’t blindly rely on the four-fifths rule.

Reducing or eliminating an adverse impact. If an employer is developing a selection tool and discovers that the use of the tool would have an unlawful adverse impact, the employer should either make changes to the tool to reduce the impact or select a different tool. Failure to adopt a known and less-discriminatory option also may result in employer liability.

Employers and HR professionals need to remain vigilant in their use of AI tools to avoid unlawful discriminatory practices. The EEOC encourages employers to regularly conduct self-assessments to ensure their polices aren’t having a disparate impact on a protected group.

To be clear, there haven’t been any changes to Title VII. The EEOC released this publication to explain that the use of AI in the workplace needs to comply with Title VII. The EEOC will evaluate alleged Title VII violations involving the use of software, algorithms, and AI tools based on the facts and circumstances of the situation and applicable legal principles.

AI is here to stay. But there are risks, as we’ve seen to date. So be wary and evaluate your risk with the help of experienced legal counsel. Give the attorneys at The Coppola Firm a call today to ensure that you’re complying with the law.

Lisa Coppola

Written by Lisa Coppola

Founder of The Coppola Firm

Lisa A. Coppola, Esq. understands the challenges her clients face, whether they’re starting a new business, taking their existing operations in a new direction, or facing a claim or threat.

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