The use of algorithmic software and automated decision systems (ADS) to make workforce decisions, including the most sophisticated type, artificial intelligence (AI), has surged in recent years. HR technology’s promise of increased productivity and efficiency, data-driven insights, and cost reduction is undeniably appealing to businesses striving to streamline operations such as hiring, promotions, performance evaluations, compensation reviews, or employment terminations. However, as companies increasingly rely on AI, algorithms, and automated decision-making tools (ADTs) to make high-stakes workforce decisions, they may unknowingly expose themselves to serious legal risks, particularly under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and numerous other federal, state, and local laws.

Quick Hits

• Using automated technology to make workforce decisions presents significant legal risks under existing anti-discrimination laws, such as Title VII, the ADEA, and the ADA, because bias in algorithms can lead to allegations of discrimination.
• Algorithmic HR software is uniquely risky because, unlike human judgment, it amplifies the scale of potential harm. A single biased algorithm can impact thousands of candidates or employees, exponentially increasing the liability risk compared to biased individual human decisions.
• Proactive, privileged software audits are critical for mitigating legal...

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