"This may include situations where an employer relies on the results of a selection procedure that an agent administers on its behalf," the EEOC stated in the guidance.Įmployers may want to ask the vendor whether steps have been taken to evaluate whether use of a tool causes a substantially lower selection rate for individuals with a characteristic protected by Title VII, the agency recommended. The employer may also be held responsible for agents' actions, including software vendors, if the employer has given them authority to act on the employer's behalf. "f an employer administers a selection procedure, it may be responsible under Title VII if the procedure discriminates on a basis prohibited by Title VII, even if the test was developed by an outside vendor," the agency states in its technical assistance guidance. The EEOC puts the burden of compliance squarely on employers. "Second, AI vendors will not usually disclose their testing methods and will demand companies provide contractual indemnification and bear all risk for alleged adverse impact of the tools." "First, front-line HR managers and procurement folks who routinely source AI hiring tools do not understand the risks," he said. "Employers are not prepared for the Title VII implications of using AI HR tools for two main reasons," said Bradford Newman, an attorney with Baker McKenzie in Palo Alto, Calif. The agency noted that disparate impact analysis was the focus of the technical assistance.Įmployers May Be Surprised by Title VII's Reach Even if the procedures are job-related and consistent with business necessity, alternatives must be considered. Neutral tests or selection procedures, including algorithmic decision-making tools, that have a disparate impact on the basis of race, color, religion, sex or national origin must be job-related and consistent with business necessity otherwise they are prohibited, the EEOC said. He described the guidance as a "wake-up call to employers." "Too many employers are not yet fully realizing that long-standing nondiscrimination law is applicable even in the very new context of AI-driven employment selection tools," said Jim Paretti, an attorney with Littler in Washington, D.C. Without proper safeguards, employers might violate Title VII when they use AI to select new employees, monitor performance, and determine pay or promotions, the EEOC said.
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