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EEOC Issues New Guidance on Artificial Intelligence in Recruiting and Employment

By Trevor R. Brice and Amelia J. Holstrom - Skoler, Abbott & Presser, P.C.

June 3, 2022

Over the years, many employers have turned to the use of artificial intelligence (AI) tools, dubbed algorithmic decision-making tools (ADMTs) by the Equal Employment Opportunity Commission (EEOC), for recruiting, hiring and other employment functions because they help employers collect and organize information about applicants and employees through already-existing software. The use of ADMTs may be convenient for busy employers but it might open Pandora’s box, as their use may lead to claims of discrimination, including disability and other types of discrimination.

The use of ADMTs has not gone unnoticed. In October 2021, the EEOC announced that it was launching an initiative to ensure that AI tools used in hiring and other employment decisions were not violating federal anti-discrimination laws. At the time, the EEOC said: “Artificial intelligence and algorithmic decision-making tools have great potential to improve our lives, including in the area of employment… At the same time, the EEOC is keenly aware that these tools may mask and perpetuate bias or create new discriminatory barriers to jobs. We must work to ensure that these new technologies do not become a high-tech pathway to discrimination.”

EEOC Issues Guidance

On May 12, 2022, the EEOC issued guidance to clarify how and when the use of ADMTs may lead to discrimination under the Americans with Disabilities Act (ADA). According to the guidance, use of ADMTs poses an increased risk of discriminating against applicants and employees on the basis of their disability for a variety of reasons.

First, the ADA requires employers to provide reasonable accommodations to applicants and employees. If an employer uses ADMT software to screen applicants or evaluate employees and it does not provide a reasonable accommodation that is necessary for the individual to be rated fairly and accurately by the ADMT, it could be discriminating against the applicant.

This can occur when an employer or the ADMT company learns that an applicant has a medical condition that makes it difficult to use the ADMT software or may result in a less favorable outcome on a test. For example, if an applicant informs the employer that he is visually impaired and that he cannot perform visual tests on a computer but must do so in another manner, and the ADMT software requires visual exercises, such as games or tests viewed onscreen, the applicant is requesting an accommodation. If the employer fails to provide an accommodation, absent undue hardship, the employer is violating the ADA.

The ADMT could also intentionally or unintentionally screen out individuals with disabilities, even though that individual is able to perform the job with reasonable accommodation. For example, if the employer uses an ADMT called a “chatbot,” which is designed to engage in communications online through texts and emails, the chatbot might be programmed with an algorithm that rejects all applicants who mention in conversation with the chatbot that they have a gap in their employment history. If this gap is caused due to a disability, then the chatbot may function to screen out the applicant due to the applicant’s disability.

Finally, the ADMT could violate the ADA’s restrictions on disability-related inquiries and medical examinations by asking the applicant or employee to submit the results of a medical examination, asking about medical conditions, or asking whether the applicant has a disability, which is only permitted after an offer of employment has been made and all legal criteria are met.

How Can the Employer be Held Responsible?

Many employers may question whether or not they would be liable for such discriminatory practices, as normally a third-party vendor runs and develops the ADMT. However, the EEOC has made clear that an employer is responsible for the use of the ADMT software and any violations of the ADA, just as it would be if the employer administered a pre-employment test developed by an outside vendor that discriminates against individuals with disabilities. Further, employers are also held responsible for the actions of ADMT vendors if the employers have given them authority to act on their behalf.   

Employers can reduce their risks by taking several steps, according to the EEOC. First, an employer should make it clear through the ADMT software used that an applicant may request an accommodation at any time if needed during the application process. An employer who receives such a request should promptly and properly act by engaging in an interactive dialogue. For example, an applicant with limited manual dexterity because of a disability may request an alternative to an ADMT that requires the use of a keyboard, trackpad or another manual input device. The employer should respond promptly and properly with alternatives to the ADMT, such as an interview over the phone, or provide a speech-to-text alternative. Employers should be aware that liability can be imputed to them if the applicant asks for a reasonable accommodation from the vendor itself and the vendor does not take action. As a result, it is important that an employer includes in its contract with any ADMT vendor that all requests for accommodations be directed to the employer immediately.  

Second, the EEOC encourages employers to thoroughly question the methodology behind ADMTs. Some ADMT vendors may claim that their ADMT is “bias-free.” However, the EEOC has made clear that this claim by the vendor alone will not absolve the employer of liability for using the ADMT.  

Given the risks, employers should ask ADMT vendors whether the ADMT was developed with individuals with disabilities in mind. Employers should also inquire whether the vendor made the interface accessible to as many individuals with disabilities as possible, if the ADMT materials are presented to job applicants or employees in alternative formats (and what formats those are), whether there are any kinds of disabilities for which a vendor will not be able to provide accessible formats, and whether or not the vendor attempted to determine if the algorithm disadvantages individuals with disabilities. To this end, the EEOC also states that employers can cut down on the risk of ADMT vendor-associated disability discrimination by developing their own ADMTs.

Finally, we strongly recommend that employers include indemnification language in their contracts with ADMTs to help protect them from liability.

EEOC Has Already Filed a Lawsuit about ADMT Use

The EEOC has already taken steps to address potential discrimination with the use of ADMTs and it isn’t limited to disability! In a complaint filed in the Eastern District of New York on May 5, 2022, the EEOC filed suit against ITutor Group, Inc. claiming that its ADMT discriminated against applicants on the basis of age. The allegations state that the ADMT automatically rejected applicants over the age of 55, as applicants who put in a birthdate to the ADMT making them 55 or older were automatically rejected by the ADMT, while younger applicants were granted an interview.

Takeaways

Given the growing acceptance and use of ADMTs in hiring and employment, it is important that employers take appropriate steps to confirm that their ADMTs are creating liability for unlawful discrimination. It is important to remember that while the EEOC issued guidance on disability discrimination under the ADA, it is also possible that ADMTs will screen out applicants or employees based on other protected characteristics, as shown by the EEOC’s complaint against ITutor Group. As such, before using ADMTs, it is imperative that employers thoroughly evaluate their vendor ADMTs or their own ADMTs for any possible discriminatory bias they may pose and seek legal advice with regard to their evaluation whenever appropriate.

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