Employers are rapidly adopting artificial intelligence (AI) in recruiting, performance, and workforce management. At the same time, state and federal regulators are rolling out new rules and guidance, with California leading the charge. The key for employers is to plan for AI adoption now, keep humans in the loop, and stay ahead of an evolving legal patchwork.

During this webinar, Marjorie Soto Garcia, Brian Casillas, and David Saunders discussed how employers can use AI responsibly, navigate new state law requirements, manage litigation risks, and prepare their workforce for change.

Key takeaways included:

1. Stay informed on an evolving legal patchwork. States are driving AI regulation in human resources (HR), imposing obligations including self-audits, notice to job applicants and employees, and transparency requirements. As an increased number of states enact these laws, employers should try to stay aware of which states have particularly stringent AI rules.
2. California is leading the charge. While several states have passed AI laws affecting HR, California is taking an active role in getting these rules on the books. Regulations issued pursuant to California’s Fair Employment and Housing Act, and the California Consumer Privacy Act of 2018 are imposing obligations including data retention, privacy impact assessments, notice requirements to consumers and employees when AI tools are used, reasonable accommodations, and not-yet-effective requirements regarding risk assessments and individuals’ rights to request human review of AI decisions.
3. Keep an eye on the federal AI landscape. While no broad federal AI law is in place, the new America’s AI Action Plan signals future national priorities regarding safety, transparency, and workforce impact. In the meantime, recent executive orders affect federal agencies and contractors, and all employers remain subject to existing federal anti-discrimination laws when AI tools are used in hiring or management.
4. AI is a tool, not the decision-maker. AI is a tool to support human-led processes; it should never be relied on to make final hiring or employment decisions. Workplaces should ensure that their HR teams and decision-makers are trained in the technology being used and how it produces certain outputs. .
5. Workforce readiness matters. AI training is key in making employees feel comfortable with AI and its adoption in the workplace, with an emphasis on safe use of AI and leveraging AI for increased productivity.

If you have questions about your AI policy in your employee handbook or other workplace policies, please do not hesitate to reach out to the webinar speakers or your regular McDermott Will & Schulte lawyer.