AI is already embedded in hiring platforms, performance management tools, and daily workflows across industries. As adoption of AI tools accelerates, so does the legal and regulatory landscape surrounding AI. Below are two critical considerations employers should have on their radar.
- Using AI Hiring Tools Can Create Liability.
Employers using AI in hiring should start from a foundational principle: anti-discrimination laws apply with full force to AI-driven employment decisions. The EEOC has made clear that employers bear responsibility for disparate impact caused by algorithmic tools, even when those tools are developed and operated by third-party vendors. Under Title VII, the ADEA, and the ADA, a facially neutral AI screening tool that disproportionately filters out candidates based on race, age, sex, or disability can expose the employer to liability regardless of discriminatory intent.
Just last week, a United States district court in California refused to dismiss claims against Workday alleging that its AI-powered hiring software discriminated against applicants based on race, age, disability, and gender.[1] The case began when an African-American , disabled man over the age of 40 claimed that he was rejected from more than 100 positions at companies using Workday’s recruiting platform, often within minutes of applying. Workday denies the claims, explaining that its software matches resume keywords to employer provided qualifications, and leaves final hiring decisions to those employers. The court did not permit Workday’s explanation to end the case.
Every HR team using AI in the hiring process is now on notice that legal exposure is no longer theoretical. Employers should inventory AI tools used in recruiting and hiring and document their governance processes. In addition, demand transparency from vendors regarding how candidates are evaluated, conduct regular bias audits, and ensure meaningful human oversight of AI-assisted hiring decisions.
- Internal AI Use Policies Are Necessary.
Beyond hiring, AI is now embedded in daily operations—from generative AI platforms used for research and communications to automated note-taking tools that join meetings. Without clear policies, employers face a cascade of risks: employees inadvertently sharing trade secrets or client confidential information with AI platforms; AI recording tools running afoul of privacy laws; and a general lack of accountability for how AI-generated work product is reviewed and verified.
Employers should establish comprehensive AI usage policies that define which tools are authorized, what data may and may not be input, how outputs must be reviewed for accuracy, and what monitoring the organization will conduct for compliance. Training should be ongoing.
[1] Mobley v. Workday Inc., Order Granting in Part and Denying in Part Motion to Dismiss, No. 3:23-cv-00770, N.D. Cal., June 22, 2026.
