Navigating the Intersection of Artificial Intelligence and Employment Law: An EEOC Reminder

Many employers, in the interest of efficiency, are beginning to incorporate artificial intelligence (“AI”) into their workplaces, and the Equal Employment Opportunity Commission (“EEOC”) has established that it will ensure that the incorporation of AI into the workplace does not violate federal employment laws. 

On August 9, 2023, a New York court filing revealed that a tutoring company that provides English-language tutoring services to students in China, iTutorGroup Inc. (the “Company”), agreed to pay $365,000 to settle claims that its use of an AI tool automatically rejected female applicants over 55 years of age, and male applicants over the age of 60.

The case, filed in 2022, was brought to the EEOC’s attention by an applicant who was rejected from a position with the Company, but later secured an interview by using a younger birthdate.  The EEOC filed a lawsuit against the Company on behalf of more than 200 applicants, alleging both age and gender discrimination.  The Company denied the allegations and continues to deny any wrongdoing.  Nonetheless, the Company settled the charges with the EEOC for a hefty price.

In addition to paying $365,000, in the settlement, the Company agreed to adopt anti-discrimination policies and conduct trainings.  The Company is also required to reconsider all applicants that were allegedly rejected because of their age.  With this settlement, the EEOC has set a precedent, and similar lawsuits will likely follow.

In addition to this groundbreaking settlement, the EEOC has shown a renewed interest in employment practices involving AI. As part of its Artificial Intelligence and Algorithmic Fairness Initiative, the EEOC issued a second technical assistance document (TAD) addressing AI use under Title VII of the Civil Rights Act of 1964 in May 2023.  Crucially, the document provides that employers cannot rely on a vendor’s assurances that its AI tool complies with federal employment laws, leaving the employer liable if the tool results in an adverse discriminatory impact.

As companies continue to incorporate AI at a rapid pace, and the technology continues to develop faster than any regulations, issues will continue to arise.  Plaintiffs’ employee firms may also pursue such cases, either individually or on a class action basis.

AI’s role in employment-related decisions offers both opportunities and challenges. While the use of automated decision-making tools can boost productivity, the iTutorGroup case serves as a stark reminder that employers must be vigilant in ensuring compliance with existing laws.