The requirement for companies to disclose their recruitment and hiring technology tools, including those using artificial intelligence, is the latest change from a government contractor watchdog. However, this new requirement is causing concern amongst employer-side lawyers over the extent of the request. The Office of Federal Contract Compliance Programs’ updated supply and service scheduling setter and itemized listing, active as of August 24, mandates that the agency’s planned audit of government contractors must also include data regarding hiring systems and methods that utilize “artificial intelligence, algorithms, automated systems, or other technology-based selection procedures”.
Concerns have arisen from the ambiguity of the language used, suggesting that it could require the disclosure of any tools involved in hiring, however minimal their role. Lawyers fear possible non-compliance for not providing information on simplistic, tech-based hiring tools such as applicant tracking systems or Excel spreadsheets.
The significance of this new requirement is attributed to increased use of AI in HR practices. A 2022 study by the Society for Human Resource Management indicated that nearly a quarter of organizations use AI in their HR departments. However, the potential for these systems to introduce bias into hiring and employment decisions has drawn attention from state and federal agencies including the Equal Employment Opportunity Commission, which recently resolved its maiden AI bias lawsuit.
The implementation of automatic hiring decisions could inadvertently disadvantage protected classes, resulting in the breach of civil rights laws. To determine whether these tools create barriers to equal employment opportunity, the Office of Federal Contract Compliance Programs intends to collect information from the scheduling letter request. Additional guidance on this letter is anticipated to be given in the future.
For greater clarity on the new requirement, there is a call for increased detail on the Frequently Asked Questions section of the agency’s website, emphasizing that AI is not generally viewed negatively “in the abstract”. Nevertheless, audits conducted by the OFCCP that reveal evidence of hiring bias could lead to pre-litigation settlement payouts, or in some cases, lawsuits against contractors.
Information shared with the EEOC due to the OFCCP’s longstanding memorandum of understanding could result in additional legal ramifications. The EEOC has included AI-based bias as a focus in its draft strategic enforcement plan. The commission has also warned employers that technology tools have the potential to breach laws such as the Americans With Disabilities Act and Title VII of the 1964 Civil Rights Act.