On April 24, 2024, the U.S. Department of Labor (DOL) issued guidance on how employers should navigate the use of Artificial Intelligence (AI) in hiring and employment practices. The DOL emphasized that eliminating humans from the processes entirely could result in violation of federal employment laws. Although the guidance was addressed to federal contractors and is not binding, all private employers stand to benefit from pursuing compliance with the evolving expectations concerning use of AI in employment practices.

The guidance was issued by the DOL’s Office of Federal Contract Compliance Programs (OFCCP) in compliance with President Biden’s October 30, 2023 Executive Order 14110, which required the DOL to issue guidance for federal contractors on “nondiscrimination in hiring involving AI and other technology-based hiring systems.”

The guidance was issued in two parts: (1) FAQs regarding the use of AI in the Equal Employment Opportunity (EEO) context, and (2) a list of “Promising Practices” that serve as examples of best practices for mitigating the risks involved with implementing AI in employment practices. In short, the FAQs communicate that established non-discrimination principles apply to the use of AI, and the “Promising Practices” provide specific instruction on how to avoid violations when using AI in employment practices.

FAQs regarding the use of AI in the EEOC context

In the FAQs, the DOL defined AI as a “machine-based system that can, for a given set of human-defined objectives, make predictions, recommendations, or decisions influencing real or virtual environments” and “automated systems” as those that “automate workflows and help people complete tasks or make decisions.” The DOL also explained how AI can be used in employment practices (i.e., hiring, performance evaluation, promotion, and termination), how non-discrimination regulations should apply to the use of AI in such employment practices, and how the DOL will investigate the use of AI in employment decisions. Key takeaways from these FAQs include:

  • The same EEO compliance obligations that apply to traditional employment decisions also extend to employment decisions made with the use of AI. Therefore, in using AI to make employment decisions, federal contractors must:
    • Take affirmative action to ensure that employees and applicants are treated without regard to their race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran;
    • Maintain records and ensure confidentiality of records consistent with all OFCCP-enforced regulatory requirements;
    • Cooperate with the OFCCP by providing the necessary, requested information on their AI systems; and
    • Make reasonable accommodations for individuals with disabilities.
  • The OFCCP will investigate the use of AI during compliance evaluations and complaint investigations to determine whether a federal contractor is in compliance with its nondiscrimination obligations.
  • AI-based tools used to make employment decisions can be “selection procedures” under the Uniform Guidelines on Employee Selection Procedures (UGESP). Under the UGESP, federal contractors must:
    • Understand and clearly articulate the business needs that motivate the use of the AI system;
    • Analyze job-relatedness of the selection procedure;
    • Obtain results of any assessment of system bias, debiasing efforts, and/or any study of system fairness;
    • Conduct routine independent assessments for bias and/or inequitable results; and
    • Explore potentially less discriminatory alternative selection procedures.
  • A federal contractor is responsible for its use of third-party products and services. They cannot delegate their nondiscrimination or affirmative action obligations by using another entity.

The guidelines acknowledge that using AI in employment decisions poses the risk of compliance issues. For example, using AI to automate timekeeping systems and calculation of pay—without a human involved to ensure accuracy—could result in incorrect calculations as it would be difficult for AI to correctly calculate time off or compensation for meal breaks, breaks for pumping breast milk, out-of-office meetings, and other breaks. Similarly, using AI to monitor activities like keystrokes and related data to gauge employee productivity could mischaracterize compensable work as non-compensable work. Any of these oversights could result in violation of federal wage and leave laws like the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP).

“Promising Practices”

The DOL’s “Promising Practices” provide recommendations to help federal contractors “avoid potential harm to workers and promote trustworthy development and use of AI.” In doing so, however, the DOL notes that: (1) the “Promising Practices” are not “expressly required,” (2) the “Promising Practices” are not an “exhaustive list,” and (3) the use of AI in the employment context is a rapidly advancing and quickly evolving area. The DOL’s guidance thus provides “Promising Practices” for various stages of implementing AI into workplace decisions.

The “Promising Practices” list includes recommendations that federal contractors should:

  • Provide advance notice of using AI.
  • Communicate transparently with employees, applicants, and representatives to ensure that all are adequately informed of the relevant policies and procedures.
  • Monitor use of AI in making employment decisions and keep track of the resulting data in order to standardize the system(s), provide effective training, and create internal governance structures with clear case standards and monitoring requirements.
  • Make sure they are able to verify the AI system and its vendor (if using a vendor-created system). The federal contractors should know the specifics of the system (data, reliability, safety, etc.) and the contract with the vendor, if applicable.
  • Conduct tests of the AI system to ensure that it is working properly and not circumventing any required compensation calculations, disability accommodations, or other legal protections.  

Employers who are using AI should carefully review the DOL’s guidance, as well as the other federal guidance regarding AI, to understand the government’s expectations regarding the use of AI as well as best practices to minimize the risk of employment claims related to the use of AI.