Regulators are trying to protect you from being fired by AI – here’s how
ZDNET’s key takeaways
- AI is playing a bigger role in hiring and firing decisions.
- New California legislation protects workers from fully automated personnel decisions.
- It could set the tone for other state or national legislation.
AI use at work is up, touching everything from everyday tasks to hiring and performance reviews. An April survey conducted by MyPerfectResume found that of 1,000 HR professionals, 73% said they use AI to make hiring decisions and 52% said they use AI to inform “restructuring and role planning.”
Hiring managers are also turning to AI for deeper behavioral insights when screening candidates: Over half of respondents (51%) use it to “flag ‘risky’ candidates.” Only 26% of respondents said they don’t use AI to make decisions about layoffs.
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California Governor Gavin Newsom recently signed new legislation protecting workers from certain AI-powered decision-makers in the workplace. The bill covers these issues from a few angles — here’s what the regulation is trying to address, and how it could set the tone for future state or federal legislation.
AI-driven firings
SB 947, somewhat cheekily called the “No Robo Bosses Act,” prohibits employers from outsourcing disciplinary and termination decisions entirely to AI, referred to in the bill as automated decision systems (ADS). The bill requires employers to check any AI decisions on employee discipline or termination, as well as provide the employee with a description of the reasons for the decision. That includes any data used to make the decision, including personnel files, evaluations, work product, peer reviews, and “witness interviews.”
“If an employer cannot corroborate the ADS output or the human reviewer has concluded that the ADS output is inaccurate, incomplete, or misleading, the employer shall not use the ADS output to make a disciplinary or termination decision,” the bill states.
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The law, which goes into effect on July 1, 2027, lets affected employees file complaints with the California Labor Commissioner if they believe this process was not followed correctly in a firing decision. It does not fully prohibit the use of automated systems for these determinations. It also requires employers to clarify whether “a mass layoff, relocation, or termination is caused by an AI system,” according to a brief on the governor’s website.
While AI regulation at the federal level remains less specific, mired in voluntary agreements with labs, and arguably focused on distractions, states have risen to the challenge of creating initial protections for workers. Still, when it comes to AI in hiring and other workplace processes, some states like Colorado and Connecticut have opted for mandating disclosure of AI use rather than actual intervention.
California and New York have tended to lead the charge on stricter laws, though Illinois passed a landmark bill this summer, becoming the first state to require third-party audits of frontier labs.
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Lily Li, a lawyer specializing in AI and founder of Metaverse Law, told ZDNET she sees California’s latest law setting the precedent for other states. But she also anticipates companies finding loopholes in the law’s required human review process.
“We could see employers engaging in check-the-box reviews rather than meaningful human review, to avoid the operational costs of an additional layer of review,” she said. “The ability for an employee to request an explanation is a helpful check against this, however.”
With that concern, it’s possible the onus of tackling unvetted AI-driven firings will fall on complainants contesting their own firings in court. Still, protections like these will remain patchwork across the country until some version of them is adopted at the federal level.
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