The trouble with AI in the workplace: EEOC issues new guidance on assessing AI’s impact on employment decisions under Title VII

The U.S. Equal Employment Opportunity Commission (EEOC) has joined the conversation about employers’ use of artificial intelligence (AI). In 2021, the EEOC launched the Artificial Intelligence and Algorithmic Fairness Initiative to ensure that the use of software, including AI and other emerging technologies used in hiring and other employment decisions comply with the federal civil rights laws that the EEOC enforces. The EEOC published two technical assistance documents in support of its agency-wide Initiative.

In its first guidance document issued in May 2022, the EEOC addressed how existing requirements under the Americans with Disabilities Act (ADA) may apply to the use of AI in employment-related decisions. Click here for more information on the EEOC’s guidance on the ADA and AI from the McDonald Hopkins Labor and Employment team. 

The EEOC recently issued a second technical assistance document on May 18, 2023, which addresses the application of Title VII of the Civil Rights Act of 1964 to employment selection procedures using AI. The scope of the latest guidance document is limited to the assessment of whether an employer’s “selection procedure” – the process it uses to make employment decisions such as hiring, promotion, and firing – has an adverse impact on employees or applicants based on characteristics protected under Title VII, such as race, gender, and national origin, among others.

Using AI for employment decisions

An increasing number of employers are relying on software and applications that incorporate AI or algorithmic decision-making at different stages in the employment process, including, for example, resume scanners that prioritize applications using certain keywords; “virtual assistants” or “chatbots” that ask job candidates about their qualifications and reject those who do not meet pre-defined requirements; video interviewing software that evaluates candidates based on their facial expressions and speech patterns; or testing software that provides “job fit” scores for applicants or employees regarding their personalities, aptitudes, cognitive skills, or perceived “cultural fit” based on their performance on a game or test.

The EEOC provides employers and tech developers with answers to common questions regarding Title VII's application to the use of automated systems in employment decisions. Importantly, the EEOC puts the burden of compliance squarely on employers. The agency states in its technical assistance guidance:

[I]f an employer administers a selection procedure, it may be responsible under Title VII if the procedure discriminates on a basis prohibited by Title VII, even if the test was developed by an outside vendor."

Compliance and responsibility for AI decisions during employment process

Employers also may be held responsible for agents' actions, including software vendors, if the employer has given them authority to act on the employer's behalf. "This may include situations where an employer relies on the results of a selection procedure that an agent administers on its behalf," the EEOC stated in the guidance. Employers may want to ask the vendor whether it took steps to evaluate whether use of a tool causes a substantially lower selection rate for individuals with a characteristic protected by Title VII, the agency recommended. But, if the vendor is incorrect about its own assessment and the tool results in disparate impact discrimination or disparate treatment discrimination, the employer could be liable.

Employers using AI or algorithmic decision-making HR tools should routinely evaluate to determine whether their employment practices have an adverse impact on employees and applicants on a basis prohibited under Title VII.  AI and its interplay with federal and state laws is rapidly evolving. Employers should review their selection policies and practices on an ongoing basis and consult with their legal counsel to ensure they remain legally compliant.

If you have any questions concerning the EEOC’s technical assistance documents or other questions concerning AI in the workplace, please contact McDonald Hopkins' Labor and Employment team.