Regulating AI in the Workplace in 2025

The following is a summary of an article by Tom Spiggle, The Spiggle Law Firm

Summary of AI in Employment and Regulatory Frameworks

Recent years have witnessed a significant transformation in how artificial intelligence (AI) is perceived and utilized—transitioning from a futuristic concept found primarily in science fiction to an everyday tool that significantly impacts modern workplaces. With the advent of AI systems like chatbots and algorithm-based decision-making tools, companies are increasingly integrating these technologies to improve business practices. For example, Gallup reports that 93% of Fortune 500 chief human resource officers have adopted AI, while about one-third of employees are aware of their employers’ AI implementations. Despite its promise for boosting productivity and efficiency, AI’s use in recruitment and other employment contexts raises concerns about potential misuse and discrimination, prompting governments to enact laws and regulations aimed at protecting workers and job applicants.

AI in the Employment Context

IBM defines AI as technology that enables computers to simulate human capabilities such as comprehension, problem-solving, and decision-making. In the recruitment process, AI can streamline the identification and selection of candidates by processing resumes and identifying patterns that might indicate a desirable applicant. However, the reliability of such systems is not foolproof. A notorious example is the 2018 incident where Amazon’s AI hiring tool, trained on a dataset predominantly consisting of male applicants, began to favor candidates with traditionally male-associated characteristics.  Although Amazon attempted to rectify the issue by modifying the algorithm to overlook gender-identifying terms, the project was eventually shelved due to persistent concerns over its effectiveness.

Regulatory Measures at the State Level

In response to concerns associated with the use of AI in employment, a number of states have introduced laws governing AI practices:

• Colorado:
  Colorado’s AI law, coming into full effect on February 1, 2026, is designed as a consumer protection measure targeting “high-risk” AI systems that could result in algorithmic discrimination. It applies to decisions with material legal or similarly significant effects, including hiring, promotions, and disciplinary actions. Employers using such AI systems must implement risk management policies, conduct annual impact assessments, and notify affected individuals if AI influenced decisions regarding employment or promotions. This law, however, only impacts employers with 50 or more full-time employees, and its enforcement is managed solely by the state attorney general, as it does not provide a private right of action.
• Illinois:
  Illinois has enacted two notable laws. The first, the Artificial Intelligence Video Interview Act (AIVIA) of 2019, governs the use of AI in analyzing video interviews. Under AIVIA, applicants must be informed about AI use, understand how the system operates, and provide consent; additionally, requests for footage deletion must be honored within 30 days. More recently, Illinois amended its Human Rights Act through HB 3773, effective January 1, 2026, which broadly prohibits employers from using AI to facilitate discrimination across all employment areas—from hiring and promotion to disciplinary measures. This legislation applies irrespective of the employer’s size and mandates transparency in AI usage.
• Other States and Localities:
  Additional measures include Maryland’s 2020 law that restricts the use of facial recognition during job interviews unless explicit consent is provided by an applicant. New Jersey’s guidance from the Attorney General reinforces that existing anti-discrimination laws extend to AI-driven decisions. Meanwhile, New York City’s Local Law 144, effective from 2023, limits the use of automated employment decision tools unless they have undergone recent bias audits, with audit results made publicly accessible and proper notifications given to applicants and employees.

Federal Actions and Legal Uncertainty

On the federal front, during the Biden administration, efforts largely revolved around raising awareness and establishing agency guidelines rather than imposing strict regulatory measures on AI in the workplace. A newer executive order implemented at the start of the Trump Administration, titled “Removing Barriers to American Leadership in Artificial Intelligence” seeks to promote the development and adoption of AI free from ideological biases, ensuring that federal policy continues to favor technological advancement over restrictive measures. As federal laws specific to AI in employment remain sparse, existing employment discrimination statutes, such as Title VII, are expected to remain the primary legal recourse for addressing any AI-induced discrimination.

Enforcing AI Protection Laws and Future Implications

A closely watched class-action case from California, in which an applicant alleges discriminatory practices by an AI-based employment vendor, underscores the increasing legal scrutiny of AI. This case illustrates that even if AI is not directly regulated by specific statutes, traditional anti-discrimination laws may still apply. The outcomes of such cases could significantly influence the future legal landscape, potentially reducing the need for further legislation by reinforcing the adequacy of current anti-discrimination frameworks.

In conclusion, while AI continues to revolutionize workplace practices, it simultaneously poses risks of unintended bias and discrimination. With most regulatory measures currently emerging at the state level and federal regulations remaining limited, employers face a complex and non-uniform legal environment. This legal uncertainty emphasizes the need for careful implementation and ongoing oversight of AI technologies to ensure fair and equitable treatment of all workers and job applicants.

This is a summary of an article by Tom Spiggle, founder of The Spiggle Law Firm, which specializes in labor and employment services for individuals.

This article appears in the April 2025 edition of Bender’s Labor & Employment Bulletin, 2025-4 Bender’s Labor & Employment 04 (2025).