AI Use in Hiring Is In-House Lawyer Blind Spot, Survey Says (1)

The use of AI tools in evaluating job candidates is flying under the radar of some corporate legal officers, according to a survey released Tuesday by Littler Mendelson PC.

In its latest survey of more than 330 US business executives, the law firm found 52% of chief legal officers and general counsel said their company isn’t using artificial intelligence systems for human resources tasks, while 18% of chief human resources officers said the same.

The gap is “a bit concerning,” said Niloy Ray, a Littler attorney and co-author of the survey report. “If you don’t have awareness of what technology you’re using within your organization, then you obviously can’t prepare for the attendant risks. Those are not just data security risks, cyberthreat risks. There are legitimate litigation risks that have to be addressed.”

A similar but smaller disparity also showed up in wariness about potential litigation risks such as employment discrimination lawsuits claiming biased outcomes due to AI usage in hiring decisions. This type of litigation was a significant concern to 27% of the HR leaders surveyed, but only 15% of the legal department leaders.

Employers and policymakers have struggled to agree on the definition of AI tools, a challenge that might partly explain the variations in survey responses about its usage.

As the uses of AI in the workplace spread, so do the legal and regulatory risks. Employers using automated or algorithmic tools to assist with hiring decisions face the threat of bias lawsuits and enforcement actions from a range of state and federal agencies, not least of them the US Equal Employment Opportunity Commission, which has declared monitoring for AI-fueled workplace bias a high priority.

The regulatory uncertainty led to 73% of respondents’ businesses scaling back their HR-related uses of AI tools, according to the survey.

Litigation in this area has focused so far on a handful of class actions against the technology developers, Ray said. But bias claims against the employers using the technology are percolating through the EEOC complaint process and will force companies to improve their awareness of their AI use in human resources.

“As of this survey, it seems like HR is starting to figure out it matters, and that hasn’t bubbled up” to legal chiefs yet, he said, but predicted that gap in awareness will disappear over time.

The litigation risks connected to HR stem largely from use of predictive AI: tools that predict outcomes such as which job candidate will be best for the position or which employee should be targeted for training and development toward future promotions into leadership.

As for generative AI, which can generate written, visual, and audio content based on inputs of existing content that’s been fed to it, the Littler survey found businesses taking a more proactive approach to developing internal policies to manage how employees use those tools.

Just under half, or 44%, of executives surveyed said their companies have implemented policies on use of generative AI, up from just 10% in the law firm’s 2023 survey. Another 44% said their company is either in the process of developing a policy or is considering one.

For employers with more than 5,000 employees, 63% of executives said they already have a policy in place.

Of those with policies governing use of generative AI, 74% said their companies require employees to comply, 23% said the policies are guidelines but not mandatory, and 3% said employees are prohibited from using generative AI.

Coinciding with the Littler survey’s release, researchers from the Federal Reserve Bank of St. Louis, Harvard, and Vanderbilt University found in an August survey that one in four US workers reported using generative AI in their jobs at least weekly.