Long before the recent mainstream popularization of ChatGPT and generative Artificial Intelligence (AI) that caught the public eye, private companies – as well as government agencies – had already been quick to incorporate AI tools into their business. From housing to finances to hiring, AI permeated the pores of business because it satisfied the one thing businesses aim to accomplish – maximizing efficiency to increase profit margins. According to a 2023 article from the ACLU, approximately 70% of companies and 99% of Fortune 500 companies had already implemented some form of AI and automation tools to increase “efficiency” in the hiring process. The global market size of the AI recruitment industry was around $618 million as of 2024 and is expected to surge to $1053 million by 2032.

The use of AI in the hiring process can help reduce the workload of recruiters by scanning thousands of resumes and filling positions faster. While in theory this sounds promising, it can lend itself to incidences of various types of illegal discrimination that employers should be aware of in the workplace.

Employment Discrimination and AI. 

In 2022 the EEOC filed a case against a Shanghai China-based English language tutor known as iTutor over the company’s use of a software programmed to automatically reject both female candidates over the age of 55 and male candidates over the age of 60 for tutoring roles. EEOC alleged a violation of the Age Discrimination in Employment Act (ADEA). Although the tutors were not considered employees, but instead independent contractors, which is out of the purview of the ADEA, in 2023 the U.S. District Court for the Eastern District of New York ordered iTutor to pay $365,000 to over 200 job candidates who were rejected as a result of automatic screening from iTutor’s employed software. Furthermore, the Court approved the EEOC’s consent decree outlining the required antidiscrimination training iTutor must undergo as a form of injunctive relief.

More recently, 2024, in Mobley v. Workday, Inc. a plaintiff alleged that Workday’s AI screening tools violated federal and California anti-discrimination laws, including Title VII, the Age Discrimination in Employment Act (ADEA), and the Americans with Disabilities Act (ADA). Derek Mobley, an African American man over 40 with anxiety and depression, claimed that Workday’s AI tools rejected his applications to over 100 jobs without a single offer. The Northern District of California allowed the disparate impact discrimination claims to proceed, recognizing Workday as an “agent” of the employers using its AI tools. This case is still pending resolution.

The Tale of Two Administrations

The increased use of AI, as expected, has drawn attention from the federal government, specifically the executive branch. Both the Biden and Trump Administrations have taken keen interest in AI.

On October 30, 2023, President Joe Biden signed Executive Order 14110, titled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” This executive order aimed to establish a comprehensive national approach to governing AI technologies. EO 1410’s main goals were to promote competition in the AI industry, prevent AI-enabled threats to civil liberties and national security, and ensure U.S. global competitiveness in AI. The order emphasized the need to govern AI technologies to realize their potential benefits while mitigating associated risks.

In turn, newly elected President Donald Trump on January 23, 2025, signed an EO titled “Removing Barriers to American Leadership in Artificial Intelligence.” In addition to revoking the Biden Administrations EO, this order focuses on removal of federal constraints on AI, encouraging businesses more freedom to innovate. By giving more powers to employers the EO encourages employers to address job security and prioritize upskilling and reskilling their workforces.

In essence, Biden’s order focused on protecting workers and ensuring ethical AI use, while Trump’s order emphasizes deregulation and innovation, placing more responsibility on employers to manage AI’s impact on employment.

The Plan Moving Forward for Employers

Given the developing legal precedents and influence by the executive branch, employers may consider the elimination of AI in the recruitment process created by themselves or third parties. Elimination in its entirety may not be the solution; however, it is essential for key stakeholders and decision makers to understand the data, training methods, and programming used by their vendors and the AI tool developers. Employers must understand the data pool the program has been trained on and what the limitations and exclusions of that data pool are. If there are indications from a vendor that the AI tool will likely exclude applicants of a protected class, the employer should avoid its use entirely to protect itself from litigation.

Employers should also consider auditing AI tools to confirm that the algorithmic screening complies with federal and state discrimination laws, regardless of whether applicable law already requires an audit. Furthermore, employers should assemble a team to oversee the tool’s use for any biases that may become apparent.

Further consideration should be given to protecting businesses from the expected onslaught of litigation challenging AI in employment. This is due to the fact that Trump’s executive order puts the onus on employers to manage AI innovation. Although executive orders are not “the law” per se, they do carry some influence. Such influence may cause employees and applicants to claim discrimination in relation to their employment opportunities.

Consulting an attorney who specializes in employment litigation can provide further guidance on the interplay between AI and employment concerns on your business.