Adams explains that what makes the case important are a trio of critical issues that HR and hiring pros must consider when using AI:

For one, Adams explains that the court accepted the argument that Workday might be liable as an "agent" of the employers that use its tools, establishing the crucial distinction between simple tools (such as email or spreadsheets) and AI-powered systems that perform decision-making tasks. "Any vendor whose AI tool is used to make employment decisions may have joint liability under Title VII, the ADEA and the ADA," Adams says.
No allegations of intentional discrimination are required to move forward with discrimination claims. An AI tool that produces "statistically skewed outcomes" can make an organization liable, irrespective of any intention, Adams says.
Finally, Adams says, the court ordered Workday to provide a list of customers who turned on the AI feature, indicating that there could be claims of discrimination against employers that receive scoring or ranking from the system.

As for ultimately avoiding being on the wrong side of this decision, Adams says HR leaders should consider AI hiring as part of a broader approach to enterprise risk management. Along those lines, he offers several immediate suggestions:

Run "privileged bias audits" of all existing AI-powered screening and recommendation tools used by the company. Also, Adams says, audit any algorithms under the supervision of legal counsel in a manner that preserves attorney-client privilege.
Keep meaningful human oversight at critical junctures. According to Adams, the AI system should inform about the hiring of applicants and should not serve as the ultimate decision-maker. "When an algorithmic tool rejects a qualified applicant because of an employment gap or an unconventional resume, there should be someone to give a human perspective," he says.
Audit vendor contracts. Here, Adams says, employers must insist that vendors provide documentation on the bias testing, ensuring there are contractual guarantees related to nondiscrimination and data transparency, and require cooperation with independent audits.
Constantly analyze hiring results for any trends, including those affecting protected classes, including age, race, gender and disability status. He says HR must help employers consider any significant disparity as a red flag that needs an immediate investigation and potential remediation.
Stay ahead of the regulatory patchwork. Adams notes that several states, including California, Illinois and Colorado, have already implemented laws covering the use of AI in hiring. "More states will follow," he says.

"The trend is clear," says Adams, noting that courts are willing to hold both vendors and employers responsible for algorithmic outcomes.

Instant Insights /

AI hiring: Is efficiency worth the legal risk?

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