Artificial intelligence (AI) continues to reshape how we live everyday life, influencing how we communicate, work, and even make routine decisions. From voice assistants like Siri and Alexa that manage household tasks to the algorithms that suggest what movies and television shows we watch on Netflix; AI has become deeply embedded in our daily routines.

The workplace is no different, as employers are increasingly using AI-driven systems to make decisions about employees throughout the employment lifecycle. In hiring, for example, many employers now use AI to analyze resumes and assess skills, and some employers evaluate job candidates by using facial and voice recognition tools in the interview process. Once employees are in the building, employers may use AI to monitor productivity, recommend promotions, or to identify training opportunities.

As the use of AI becomes increasingly integrated into workplace decision making, lawmakers across the country have shown increased concern about its potential to perpetuate discrimination. Employers should not only recognize these risks but also stay informed about evolving AI-related legislation and compliance requirements.

Why the Concern?

At first glance, it may be hard to understand how workplace AI systems could create or reinforce bias. However, as research into these technologies expands, evidence has shown that AI systems can inadvertently discriminate against employees.

Workplace AI systems often rely on historical data to predict candidate success or employee performance, and when that data reflects existing societal or organizational biases, the algorithms can replicate discriminatory patterns. For instance, keyword-based resume screening can exclude qualified candidates if the algorithm prioritizes terms historically associated with male-dominated roles. Similarly, AI-powered video interview platforms that evaluate facial expressions or speech patterns can unintentionally disadvantage individuals with disabilities or those with diverse accents.

Need a real-world example? Sirius XM Radio is currently embroiled in a lawsuit filed by a job applicant who alleges that the company’s AI-driven hiring tool systematically discriminates against African American candidates.¹ According to the complaint, the tool assigns scores based on data points that serve as proxies for race—such as educational institution, home zip code, and employment history—resulting in intentional discrimination. The plaintiff is seeking front pay, back pay, damages for emotional distress, and injunctive relief requiring the company to revise its practices to ensure equitable hiring. This case is only one of several AI-related employment lawsuits across the country, underscoring the significant risks employers face if they are not careful with their use of AI tools in the hiring process.

Increased State Legislation

In addition to litigation risks, employers must also remain aware of state laws that are regulating the use of AI in employment decisions, as several states have enacted laws aimed at curbing potential discrimination with AI tools. For example, California recently amended its Fair Employment and Housing Act to prohibit employers from using automated decision systems that result in discrimination based on protected characteristics. The law also imposes recordkeeping and additional transparency obligations.

Illinois has also amended its Human Rights Act to impose obligations on employers’ use of AI in employment decisions. Beginning in January 2026, employers will violate the Act if they use AI in recruitment, hiring, promotion, or other employment decisions without notice to employees. The new Illinois law also prohibits using zip codes as a proxy for protected classes, reflecting lawmakers’ concerns that geographic data may oftentimes correlate with race or national origin, which may result in discrimination.

Colorado’s AI Act, which takes effect in June 2026, classifies any AI system that plays a “substantial factor” in hiring, promotion, pay, or other consequential employment decisions as “high-risk.” Among other requirements, employers utilizing such systems must implement risk management policies and conduct annual impact assessments to identify potential bias.

Staying Ahead of the Risks

As lawsuits and legislation surrounding employer use of AI continues to gain momentum, proactive employers should take steps to minimize associated risks. Recent legislation indicates that transparency is critical, so employers should disclose the use of AI tools in hiring, performance evaluations, and other employment decisions. Employers should also conduct regular bias audits to ensure algorithms do not disproportionately impact protected groups. And last but not least, employers should train their human resources and management teams on the ethical and legal implications of AI and maintain detailed records of decision-making rationales to limit exposure in the event of a dispute.

For more information, contact Charles E. Bush II or any member of Ice Miller's Workplace Solutions Group.

^{[1] Harper v. Sirius XM Radio, LLC, U.S. District Court, Eastern District of Michigan (2:25-cv-12403)}

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.