June 20, 2024

The US Department of Labor is Jumping on the AI Regulatory Bandwagon

The advancement of artificial intelligence (AI) has prompted state and federal agencies – at all levels – to initiate regulatory efforts and guidelines aimed at balancing innovation with workplace safeguards. A major concern across all regulatory agencies is the potential for inadvertent discriminatory practices.  

Automated decision-making systems — which may rely on algorithms or AI — are increasingly used in employment settings to facilitate a wide range of decisions related to job applicants or employees, including recruitment, hiring, and promotion. While such tools provide myriad benefits, they can also exacerbate existing biases and contribute to discriminatory outcomes (e.g., AI tool that rejects women applicants by mimicking the existing features of a company’s male-dominated workforce or a job advertisement delivery system that reinforces gender and racial stereotypes by directing certain jobs to women or workers of color). 

Over the last few weeks, we have highlighted a few of the key regulatory schemes and guidelines at the state level impacting an employer’s use of AI and other automated decision-making technologies when making employment-related decisions. In the last of our series, we’ll be looking at how the federal government is addressing the issue. 

U.S. Department of Labor Wage Guidance on the Use of AI: 

On April 29, 2024, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued Field Assistance Bulletin No. 2024-1 entitled “artificial Intelligence and Automated Systems in the Workplace under the Fair Labor Standards Act (FLSA) and Other Federal Labor Standards.”i  Like the state law and guidelines set out in previous editions, the WHD is concerned with preventing unlawful conduct associated with the use of AI in the workplace. The WHD’s position is that while AI and other automated systems can streamline employer tasks, human oversight must be a priority to avoid potential compliance challenges.  

The WHD guidelines are concerned with ensuring AI systems used to record working time, meals, rest periods and the like, capture all hours worked in accordance with federal minimum wage and overtime laws. The guidelines caution employers using AI systems aimed at productivity and predictability, that activity metrics are not the same as and do not necessarily equate to ‘hours worked’ when it comes to FLSA compliance.  

Employers subject to the FLSA should be mindful that liability associated with the use of AI systems – much like liabilities associated with the use of a company’s payroll provider – cannot be passed along. Such systems should be frequently audited and monitored to ensure compliance.