Articles Posted in Artificial Intelligence (AI)

Employers’ use of artificial intelligence (AI) in hiring and other employment matters has raised concerns about how the technology may perpetuate discrimination in their processes. New Jersey and federal employment laws prohibit employment discrimination based on factors such as race, sex, disability, and age, among others. Recently, New Jersey has determined that these legal protections may make employers liable for discrimination resulting from AI technology. The New Jersey Attorney General (AG) and the Division of Civil Rights (DCR) issued guidance in January 2025 regarding “algorithmic discrimination” by employers using AI tools to aid in employment decisions.

While New Jersey does not yet have any laws that directly address the use of AI in hiring decisions, there is a proposed bill pending that would regulate the use of “automated employment decision tools.” This term refers to software that uses AI models to screen job applicants and identify candidates considered preferable for a position. Although that may seem harmless on its face, there is a problem: AI doesn’t think. Its responses are based on the prompts it is given by the user and are representative of the data on which it is trained, which may reflect historical institutional and systematic inequities. Therefore, if a machine learning application is told to weed out certain applicants based on a protected category, or is trained on biased data, it could result in biased recommendations.

The New Jersey AG and the DCR has launched a Civil Rights and Technology Initiative to review the risks of employment discrimination in AI tools.

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Artificial intelligence (AI) applications are becoming quite common for a wide range of uses in employment. Many businesses use AI tools in hiring as a way of increasing efficiency, They can train AI tools, for example, to screen out applicants who meet certain criteria, or to look for certain favored criteria. The trick, as it turns out, is to make certain that the use of AI in hiring does not lead to violations of New Jersey employment law. On multiple occasions over the past few years, AI hiring tools have produced outcomes that demonstrate bias based on race, sex, or other factors. Even if a machine or algorithm makes a hiring decision, the employers may ultimately be liable for unlawful discrimination. The legal system is still catching up to these aspects of AI. A recent study shows how biases in the information that an AI system receives can lead to biased outcomes.

The New Jersey Law Against Discrimination (NJLAD) prohibits discrimination based on numerous factors, including race, sex, religion, disability, sexual orientation, gender identity, pregnancy, and national origin. Overt discrimination, such as refusing to hire someone specifically because they belong to a group listed in the NJLAD, is not the only kind of unlawful discrimination. Disparate impact discrimination occurs when a policy or practice has an outsized impact on members of a protected group, regardless of whether the employer intended to discriminate.

AI hiring tools may fall somewhere between these two types of discrimination. They can have a disparate impact on a protected group with no biased intent on the employer’s part. Studies suggest, though, that any bias AI shows is the result of bias in the information used to train the AI. Employers’ legal duty to guard against these types of bias remains an op[en question.
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The Americans with Disabilities Act (ADA) of 1990 protects workers against discrimination because of injuries, illnesses, and other conditions that impair their daily lives. The statute prohibits employers from discrimination based on disability and requires them to provide reasonable accommodations to help employees with disabilities perform their jobs. Compliance with the ADA often requires careful consideration of employees’ needs on a case-by-case basis. The Equal Employment Opportunity Commission (EEOC) has addressed concerns about employers’ use of artificial intelligence (AI) systems to handle various tasks once left to human employees. The agency has identified areas of concern where an AI system could lead to ADA violations.

Protections Under the ADA

An employer may not “discriminate against a qualified individual on the basis of disability” in matters like hiring, promotions, termination and layoffs, compensation, and other aspects of employment. The ADA prohibits “medical examinations and inquiries” intended to assess whether an individual has a covered disability, or the extent of such a disability.

The statute imposes an obligation on employers to make reasonable accommodations for “the known physical or mental limitations” of an employee or job applicant who is otherwise able to perform their job duties. The only exception is when an employer can show that an accommodation “would impose an undue hardship” on the employer’s business. Accommodations that have been deemed “reasonable” include wheelchair access, flexible scheduling, and reading assistance for employees with visual impairments.
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Employment discrimination on the basis of factors like race, religion, sex, sexual orientation, gender identity, and disability is unlawful under New Jersey employment law. Broadly speaking, courts have identified two types of unlawful employment discrimination: discriminatory intent and disparate impact. Cases based on discriminatory intent often involve overt bias. In disparate impact cases, an employer may violate the law if their policy or practice has an outsized adverse impact on a protected group, even if it appears outwardly neutral. A group of federal agencies developed a guideline several decades ago, known as the Four-Fifths Rule, for determining when a policy or practice has too much of a disparate impact on a protected group. While this rule significantly predates the current use of artificial intelligence (AI) in employment, it provides a useful guide for assessing when an AI tool might violate employment laws.

Title VII of the Civil Rights Act of 1964 is the main federal statute dealing with employment discrimination. It mentions five protected categories by name: race, sex, religion, color, and national origin. Congress amended the statute in 1978 to add discrimination based on pregnancy and childbirth to the definition of sex discrimination. The U.S. Supreme Court has held that sex discrimination includes discrimination based on sexual orientation and gender identity.

The Four-Fifths Rule is based on uniform guidelines developed by four federal agencies in 1978: the Equal Employment Opportunity Commission (EEOC), the Civil Service Commission, the Department Of Labor, and the Department of Justice. Although it includes the word “rule,” the Four-Fifths Rule is more like a guideline that provides an idea of when an employment practice might run afoul of the law.
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Employers have begun relying on various artificial intelligence (AI) tools to streamline the hiring process and other aspects of the employment relationship. While the marketing for these tools sometimes claims that they can perform certain tasks better than humans, experience demonstrates that they are not free of many human biases. Humans programmed the AIs, after all, and may have included their own biases in the code. Two pending bills would amend New Jersey employment law to regulate the use of these tools in the hiring process. One would require “bias audits” of AI-based analytical tools. The other bill deals specifically with AI tools that analyze video interviews of job applicants.

The Use of AI in Hiring

The term “artificial intelligence” can refer to several types of software applications. Generative AI, for example, can create written or visual works based on user prompts. Employers use analytical AI tools to go through large amounts of data and make recommendations or decisions. For example, an AI system could screen job applicants based on whatever factors employers choose. This is the source of much of the concern about AI in employment decisions. Employers are ultimately liable for bias in an AI tool’s algorithm.

Automated Employment Decision Tools

A3854, introduced in the New Jersey Assembly on February 22, 2024, would regulate companies that produce and sell “automated employment decision tools” (AEDTs), as well as the employers that use them. The bill defines an AEDT as a system that uses statistical theory or a learning algorithm to filter job applicants or employees in a way that “establishes a preferred candidate or candidates.” Any AI system that screens job applicants would fit this definition.
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