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Fisher Phillips: Comprehensive Review of AI Workplace Law and Litigation as We Enter 2025

1. No Federal AI Workplace Law – There remains no federal law specifically regulating the use of AI in the workplace. However, as early as 2022, the Equal Employment Opportunity Commission (EEOC) issued a reminder to employers that the use of AI for assessing job applicants and employees may violate the Americans with Disabilities Act (ADA). It followed up in 2023 with a technical assistance document saying it will apply long-standing legal principles in an effort to find possible Title VII violations when employers use AI to assist with hiring or employment-related actions.
2.  Failed Privacy Law – An early version of the proposed American Privacy Rights Act would have required employers to notify applicants and workers when AI is used for workplace decisions and given workers the right to opt out of its use for consequential employment decisions. The proposal was amended to remove these provisions, however, before ultimately failing in Congress. We don’t expect a similar proposal to gain traction in the near future given the change in Congressional control.
3. Other Failed Federal Proposals – Last year also saw several other proposals in Congress related to the regulation of AI in the workplace, from the “No Robot Bosses Act” to the “Algorithmic Accountability Act.” None advanced far, and we don’t expect similar proposals to get close to passage in 2025.

Court Actions and Discrimination Allegations

Workers and labor advocates have begun to take action against employers for perceived AI-related wrongs.

1. Lawsuit Against AI Workplace Screener – A California federal court allowed a frustrated job applicant to proceed with an employment discrimination lawsuit against an AI-based vendor after more than 100 employers that use the vendor’s screening tools rejected him. The judge’s decision allows the class action against Workday to continue based on employment decisions made by its customers on the theory that Workday served as an “agent” for all of the employers that rejected him and that its algorithmic screening tools were biased against his race, age, and disability status. (July 2024)
2. FTC Investigating AI Hiring Tools – The ACLU fired a warning shot to employers by asking the Federal Trade Commission to investigate AON’s personality assessment test, a video interview tool, and a cognitive ability assessment screening device – all powered by AI – because of alleged discrimination. The agency has not yet issued a decision in this matter. (May 2024)
3. EEOC Investigating Alleged AI Discrimination – Besides filing a claim with the FTC as noted above, the ACLU also filed a charge with the EEOC over AON’s AI-powered hiring tools, alleging they unfairly screen out applicants with disabilities and unfairly target those with certain racial backgrounds. The agency has not yet issued a decision in this matter. (2024)
4. EEOC’s First-Ever AI Lawsuit Settlement (Sort Of) – The EEOC settled a claim against a tutoring company alleging that its AI-powered hiring selection tool automatically rejected women applicants over 55 and men over 60. The company agreed to pay $365,000 to resolve the charges. However, a closer examination shows that the tool used by the employer was fairly rudimentary and not necessarily any sort of cutting-edge AI system. (Aug. 2023)