As artificial intelligence (AI) continues to reshape the modern workplace, a growing legal trend is emerging around its use in employment decisions. From hiring algorithms to performance monitoring tools, employers are increasingly relying on AI to streamline operations—but not without legal consequences.

Equal Employment Opportunity Commission Scrutiny and Legal Risks

The Equal Employment Opportunity Commission (EEOC) has ramped up its focus on AI-driven employment practices, warning that automated systems may unintentionally perpetuate bias. In particular, the agency is investigating whether AI tools used in hiring and promotions violate Title VII of the Civil Rights Act by discriminating against protected groups.

One high-profile case involves a collective action lawsuit against a major tech firm accused of using an AI resume screening tool that disproportionately rejected older applicants in violation of the Age Discrimination in Employment Act. The litigation, styled Mobley, et al. v. Workday, Inc. and which is still pending in the United States District Court for the Northern District of California, could set a precedent for how courts evaluate algorithmic bias in employment contexts.

What Employers Should Watch Out For

Transparency and accountability: Employers must understand how their AI tools function and be prepared to explain decision-making processes.

Bias audits: Regular audits of AI systems can help identify and mitigate discriminatory outcomes.

State-level regulation: Several states, including New York and California, are introducing laws requiring disclosure and fairness assessments for AI in hiring. For example, as of October 1, 2025, California employers will need to ensure they implement the following measures with respect to the use of AI employment tools:

• Verify that all AI and algorithmic systems used in employment decisions align with California’s Fair Employment and Housing Act anti-discrimination requirements; 
• Proactively address potential disparate impacts even in the absence of discriminatory intent; 
• Understand that employers may be held responsible for biased outcomes as a result of third-party vendor tools under agency theories; 
• Maintain comprehensive records, including decision-making logic, input and output data, and results from bias audits, for at least four years; and
• Implement regular bias audits and monitor outcomes to support a possible affirmative defense in the event of legal scrutiny.

Looking Ahead

As AI adoption accelerates, legal frameworks are struggling to keep pace. Employers should proactively review their use of AI technologies and consult legal counsel to ensure compliance with evolving standards. The intersection of technology and employment laws is no longer theoretical—it is unfolding in real time.

For questions regarding the use of AI in the workplace, please reach out to Abigail Barr or any other member of Ice Miller’s Workplace Solutions team.

This publication is intended for general informational 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 circumstance.