As artificial intelligence becomes more common in recruitment, New Jersey employers must tread carefully. While AI tools promise speed and efficiency, using them without proper care can lead to AI hiring discrimination and other legal problems, especially if the technology unintentionally discriminates against job candidates.
In fact, a 2023 report by the Equal Employment Opportunity Commission (EEOC) revealed that 83% of employers now use some form of AI in hiring, and 44% use it to screen resumes or rank applicants. As use grows, so do legal risks. Employers must learn how to use AI in hiring, ensuring these tools follow both federal anti-discrimination laws and New Jersey’s AI Laws and strict hiring regulations. The New Jersey Division on Civil Rights (DCR) released new guidance on algorithmic discrimination, emphasizing that discrimination caused by AI is just as unlawful as discrimination by human decision-makers.
What Is Algorithmic Discrimination?
Algorithmic discrimination occurs when AI-driven tools, such as hiring algorithms or employee monitoring software, produce biased outcomes that disadvantage individuals based on protected characteristics, including race, gender, age, disability, or religion. The DCR’s guidance underscores that employers are fully responsible for the technology they use and cannot shift liability onto third-party vendors.
How Algorithmic Bias Occurs
The DCR identifies three key factors that contribute to AI hiring discrimination:
- Design Flaws: If an algorithm is built using biased assumptions, it will likely generate discriminatory outcomes.
- Training Data Issues: AI learns from past data; if that data reflects historical discrimination, the system may perpetuate it.
- Deployment Bias: Even unbiased tools can produce discriminatory results depending on how they are implemented in real-world settings.
How To Use AI in Hiring
Employers using automated decision-making tools must ensure their compliance with NJLAD. To harness AI effectively and ethically in recruitment, consider the following steps:
- Regularly audit AI tools: Try to ensure that the AI systems used are tested for biases that could disadvantage candidates based on race, age, gender or disability. Periodic audits can help maintain fairness in the hiring process.
- Maintain transparency with applicants: Inform candidates if AI tools are used in the hiring process. While not currently mandated in New Jersey, transparency can build trust and may become a legal requirement in the future.
- Train human resources personnel: Equip your HR team with knowledge about how AI tools function and their potential pitfalls. Human supervision is vital in interpreting AI recommendations appropriately.
- Protect candidate data: Ensure that personal data collected through AI tools is securely stored and used solely for recruitment purposes, which aligns with privacy regulations.
- Establish clear vendor agreements: When partnering with AI vendors, include clauses that hold them accountable for compliance with anti-discrimination laws and outline procedures for addressing any issues.
- Document your hiring process: Keep clear records of hiring decisions, especially when AI tools are involved. Documentation can show that decisions were based on lawful, job-related criteria should your process be ever questioned.
- Stay updated on legal changes: AI regulations are evolving quickly. Keep up with updates from the EEOC, New Jersey Division on Civil Rights and other legal sources. With the ever-changing laws, what worked today might be restricted tomorrow, so regular legal check-ins are key.
These steps can help employers build an efficient and legally sound hiring process.
Integrating AI into hiring practices requires careful consideration of legal implications. If you are considering using AI for hiring, explore the option with a legal practitioner. They can provide support tailored to your organization’s needs, helping ensure that your recruitment processes are innovative and compliant.
Key Areas of Concern for Employers
- Screening resumes and filtering job applicants.
- Conducting video interviews with AI-based scoring
- Employee productivity monitoring
- Performance evaluations and terminations
While these tools promise efficiency, they can also reinforce existing biases if not properly tested and monitored.
New Jersey AI Laws
The second New Jersey bill, A. 3911, concerns the use of AI-enabled video interviews during the hiring process. The bill provides that “an employer in the State” that requests job candidates to record video interviews, and uses AI analysis of the videos submitted, would be required to:
- Notify applicants in advance that AI may be used to assess their video interviews.
- Explain how the AI works and what traits it evaluates.
- Obtain written (or electronic) consent before using AI for evaluation
The proposed law places additional responsibilities on employers who use AI to analyze video interviews. To comply, employers would need to:
- Prohibiting use of AI on applicants who have not consented
- Deleting interview videos within 30 days upon an applicant’s request
- Directing any third parties with copies to delete them
- Collecting and reporting demographic data, such as race and ethnicity, for both applicants who are and are not selected for in-person interviews and job offers
- Submitting this data annually to the Department of Labor and Workforce Development
Disparate Treatment and Disparate Impact Discrimination
AI tools can violate anti-discrimination laws in multiple ways. Even when AI tools are applied equally, they may rely on proxies like zip codes or voice patterns that correlate with protected traits such as race or gender.
Examples of Discriminatory AI Practices
- Disparate Treatment: Using AI to intentionally treat members of protected classes differently
- Selective Use of AI: Applying AI only to certain groups, such as only screening Black applicants
- Use of Proxies: Relying on data points like names or zip codes that act as stand-ins for race or gender
- Disparate Impact: Applying neutral criteria that disproportionately affect specific groups, such as women-owned businesses being unfairly screened out
Best Practices
To decrease the risk of liability under the LAD, employers should take certain steps to ensure the AI tools they are using to make or inform employment decisions are not engaging in algorithmic bias or otherwise violating the LAD. These steps include:
- Form a cross-functional AI oversight team including legal, HR, IT, and privacy representatives
- Develop and implement clear AI-related policies and procedures
- Train employees on AI tools and algorithmic bias; restrict usage to trained staff
- Vet AI vendors thoroughly and require contracts to include legal compliance, transparency, audit rights, and indemnification with insurance
- Regularly audit tools, address issues promptly, and review insurance coverage
- Maintain a human role in all AI-influenced employment decisions
It is essential for employers to continuously monitor their practices as technology and legal standards evolve. Staying informed helps ensure ongoing compliance and protects both the organization and its employees. Employers should also consider engaging third-party experts to evaluate their AI systems and recommend improvements based on current legal and ethical standards.
Broader Implications Across Industries
The use of AI tools extends far beyond employment, impacting sectors like finance, healthcare, and the courts. The same risks apply to hiring AI, which can learn biased patterns from historical recruitment data. Examples of unintended discrimination include penalizing candidates based on:
- Speech patterns
- Physical appearance
- Educational background
These factors often correlate with protected characteristics such as race, gender, or socioeconomic status. Employers must stay vigilant to ensure AI tools promote fairness rather than amplify bias.
These developments signal that compliance standards for AI in hiring and other fields will continue to grow, making proactive oversight essential.
Need Help Avoiding AI Hiring Discrimination? Contact Hamilton Law Firm Today
If your organization is using or considering AI tools in hiring, performance evaluations, or other employment decisions, now is the time to ensure your practices are fair, transparent, and legally compliant. The legal landscape around AI and employment law changes daily and raises the risks. Contact Ayesha Hamilton at Hamilton Law Firm for trusted legal guidance on navigating algorithmic discrimination and safeguarding your business.