AI Hiring Tools: A New Wave of Regulations
The use of AI hiring tools has become increasingly common, but a major gap exists between what these tools do and what employers and applicants know about them.
Landmark Lawsuits and Regulations
A recent lawsuit against Eightfold AI, a hiring platform used by several Fortune 500 companies, has brought attention to the lack of transparency in AI hiring tools.
The plaintiffs argue that Eightfold operates like a background check company without following the laws that govern background checks, including the Fair Credit Reporting Act (FCRA).
Key Issues with AI Hiring Tools
AI hiring tools often pull data from public sources, including social media and professional profiles, to build detailed dossiers on candidates.
Applicants are not given the opportunity to review or dispute their scores, which is a requirement under the FCRA.
California Sets the National Compliance Clock
California’s Privacy Protection Agency has finalized regulations that impose stringent requirements on employers’ use of automated decision-making technology in employment decisions.
These regulations, which take effect January 1, 2027, require employers to conduct formal risk assessments, provide pre-use notices to applicants and employees, and honor opt-out and access rights.
What Employers Should Do
Employers should start by reviewing their vendor contracts and researching the data sources used by their AI tools.
They should also audit their automated tools against the meaningful human involvement standard and build documentation, including risk assessments and human review protocols.
By taking these steps, employers can get ahead of the regulatory curve and ensure compliance with the new laws and regulations surrounding AI hiring tools.
Conclusion
The law is catching up to AI hiring tools, and employers must take action to ensure compliance.
By understanding the key issues with AI hiring tools and taking steps to address them, employers can minimize their risk and ensure a fair and transparent hiring process.
FAQs
- What is the Fair Credit Reporting Act (FCRA)?
- How do AI hiring tools work?
- What are the new regulations in California?
- What should employers do to ensure compliance?
- What are the consequences of non-compliance?
