AI Data Center Expansion Poses High Risk of Child Labor Issues

Artificial intelligence companies are pouring billions of dollars into data center expansion across the US, promising jobs, tax revenue, and infrastructure investment. While these projects can deliver meaningful economic and technological benefits, rapid expansion also brings serious risks that demand legal and compliance attention. These include the potential for child labor exploitation and abuse, dangers that are already well documented in manufacturing and construction supply chains.

In-house lawyers and compliance professionals play a central role in mitigating risks to children. They can, for example, help formulate and implement robust child-centered policies and strong due diligence processes. These measures will address potential long-term harmful impacts on children, reduce corporate liability, and maintain a positive business reputation.

Investment and Impacts

The largest US technology platforms have committed tens of billions of dollars to build and expand AI-ready data center facilities across multiple states, such as Georgia, Virginia, Ohio, Arizona, Oregon, and Washington. Similarly, the $500 billion Stargate initiative has made long-term infrastructure commitments exceeding $1.4 trillion, and other AI companies individually have pledged to invest tens of billions in custom data center projects across the Northeast and Southwest.

Many of these companies are already grappling with how their products and services will affect children in the US. Far less attention is paid to the more foundational risk of child labor within their domestic operations, such as in data-center construction.

The rapid US expansion of data centers poses many related risks for young people, such as:

• heightened demand for low-cost labor
• extensive construction and other hazardous work
• overnight and third-shift schedules
• heavy reliance on subcontractors and labor brokers

Similar conditions have contributed to the recent rise in child labor violations in the US, with the Department of Labor reporting a 31% increase in child labor between 2019 and 2024.

A child engaged in hazardous work risks bodily injury, psychological trauma, and even death. Child labor can lead to slavery and sexual or economic exploitation. In nearly every case, it prevents children’s access to education and health care, perpetuating the cycle of poverty that compels children to seek work in the first place.

Uneven Regulatory Enforcement

This surge in potential dangers is happening when federal and some state regulators have scaled back enforcement of corporate sustainability and human rights obligations. A lax enforcement environment can discourage companies from prioritizing human rights compliance.

Weakened regulatory oversight doesn’t eliminate the risk of legal exposure—it increases the likelihood that violations will go undetected for extended periods, allowing harmful practices to become embedded across business operations. When violations eventually surface, as they often do through whistleblowers, media scrutiny, or regulatory inquiries, the consequences are more severe. They subject companies to lawsuits and damage reputations, often irreparably.

Recent enforcement actions in the food processing and manufacturing sectors illustrate this dynamic. In 2023, regulatory and media investigations revealed that children as young as 13 were working illegally on overnight shifts, assigned dangerous tasks such as deboning poultry and sterilizing meat cleavers, and suffering serious injuries.

These violations persisted in part because of weak regulatory oversight, heavy reliance on labor brokers and subcontractors, and the failure of businesses to step into the breach. When these problems surfaced, the companies involved faced more substantial monetary penalties, far-reaching consent orders, and sustained public scrutiny. Reputational damage extended beyond the individual facilities involved, eroding trust in well-regarded consumer brands and raising broader questions about corporate governance and supply chain controls.

These cases present a lesson for rapidly expanding industries. Delayed enforcement causes significant harm to children—and it also may result in increased liability, challenging remediation questions, and diminished business value.

Applying Compliance Standards

As reflected in UNICEF USA’s Child Labor Compliance Framework, effective child rights due diligence requires risk-based assessments tailored to a company’s operations and business relationships. It also involves enforceable controls over subcontractors and labor brokers, ongoing monitoring and auditing, and remediation processes grounded in the child’s best interests.

The framework is based on well-established international and US regulatory standards. For example, the United Nations Guiding Principles on Business and Human Rights, together with guidance from the Department of Labor, provide a template for corporations seeking to mitigate child labor risk in large scale infrastructure projects. They emphasize the importance of formulating clear policies and expectations for compliance, clarifying governance structures and decision-making authorities, and instituting processes for addressing risks as soon as they are identified.

For data center construction, compliance and due diligence processes should examine specific risks such as labor sourcing across subcontracting tiers, the use of staffing agencies and labor brokers, the presence of hazardous or overnight work, age verification practices, and local labor market conditions. These assessments should be paired with active contractor oversight, accessible grievance mechanisms, and child-centered remediation processes designed to root out violations and prevent their recurrence.

Key Takeaways

The conversation about AI and human rights almost inevitably focuses on digital harms and children’s online safety. It’s crucial to pay attention to additional and perhaps more basic risks stemming from the conditions under which the physical infrastructure supporting AI is built, and the impact those conditions can have on children, particularly from vulnerable communities.

Companies must identify and address these risks and ensure that the protective measures they establish are taken seriously. Doing so will help corporations meet their legal obligations and enhance their credibility and long-term business value. And it will go a long way toward ensuring that the development of AI doesn’t come at the expense of children’s rights.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jonathan Drimmer is a partner at Steptoe in Washington, DC, where he co-leads the firm’s business and human rights practice.

Jessica Leinwand is general counsel of UNICEF USA and previously served as director of strategic counsel at Meta Platforms Inc. She is an adjunct professor on child rights and business at American University’s Washington College of Law.

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