Artificial Intelligence (AI) is transforming the modern workplace. From automated resume screening to performance tracking software, AI is quickly becoming a key tool in hiring, managing, and evaluating employees.
But as these tools become more common, they also raise serious questions about fairness, privacy, and compliance. Are decisions made by algorithms really unbiased? Can employers be held accountable for how AI treats employees? And what rights do workers have when a machine is making decisions about their careers?
In California and across the country, the law is still catching up, but awareness is critical now.
How Employers Are Using AI
AI is already being used in many employment decisions, including:
- Hiring and recruiting: Resume screening algorithms and chatbots are used to evaluate candidates before a human even sees an application.
- Employee monitoring: Software can track keystrokes, screen time, and productivity data to evaluate employee performance.
- Scheduling and task assignment: Algorithms help determine optimal staffing levels and assign shifts.
- Performance evaluations: Some employers use AI-generated reports to make decisions about promotions, raises, or terminations.
While these tools can create efficiencies, they can also lead to unintended bias, errors, or privacy violations if not used properly.
Legal Risks and Compliance Concerns
1. Discrimination and Bias
AI tools that use historical data can replicate existing biases in hiring or promotions. For example, if a resume screening algorithm is trained on data from a company that historically favored men for leadership roles, the tool may continue to favor male candidates—even if that was never the intention.
In California, this could lead to violations of:
- The Fair Employment and Housing Act (FEHA)
- Title VII of the Civil Rights Act
If an AI system results in a disparate impact on protected groups (based on race, gender, age, disability, etc.), employers can be held legally responsible, even if no human meant to discriminate.
2. Employee Privacy
AI monitoring software can track behavior at an extremely detailed level—sometimes without the employee’s full awareness. California’s Constitutional Right to Privacy, along with workplace surveillance laws, puts limits on how much employers can observe and record.
Employers must inform employees of any monitoring systems, especially if they collect:
- Biometric data (like facial recognition or fingerprint scans)
- Personal browsing habits
- Audio or video recordings
- Productivity metrics tied to job performance
Failure to obtain consent or to explain what is being collected can lead to privacy violations and legal complaints.
3. Transparency and Accountability
If an employee is denied a job, raise, or promotion based on an AI decision, they have a right to know why. Yet many AI systems are “black boxes,” offering no clear explanation of how decisions are made.
Employers should:
- Keep detailed records of how AI tools operate
- Use explainable AI systems where possible
- Allow for human review of decisions that affect someone’s job or livelihood
Ethical Best Practices for Employers
Even when not required by law, employers should hold AI tools to high ethical standards to protect employee rights and avoid harm.
- Audit algorithms regularly to check for unintended bias
- Include diverse data sets when training AI models
- Ensure human oversight of important employment decisions
- Train HR and management on how to use AI tools responsibly
- Offer employees clear communication about how AI is being used and how they can challenge decisions
What Employees Should Watch For
If you believe an AI tool has led to unfair treatment at work, consider the following steps:
- Ask for transparency – You have a right to know what data is being collected and how it is used.
- Document the impact – Keep records if you believe an automated system has harmed your employment opportunities.
- Seek legal guidance – If an AI decision has caused a loss of employment or benefits, an employment attorney can help determine your rights.
Looking Ahead
AI is here to stay, but how it’s used in the workplace is still being shaped. As legal standards evolve, employers must tread carefully, and employees should stay informed.
Technology should support fairness, not replace it.
The blog published by Fairchild Employment Law is available for informational purposes only and is not considered legal advice on any subject matter. By viewing blog posts, the reader understands there is no attorney-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation.