AI, Compliance and Employment
As an HR professional, you’ve likely noticed the rapid transformation AI (especially Generative AI) is bringing to the modern workplace. It’s an exciting time, but also one that may raise questions and concerns. From optimizing supply chains to enhancing customer experiences, AI applications are vast and the potential for increased efficiency and productivity is significant.
But what does this mean for you, your employees, and your responsibilities in HR? We’re unpacking AI in the third and final installment on our compliance series. (If you missed Part 1 & Part 2, read them after finishing this piece!)
In this final compliance blog, we’re:
- Unpacking what Generative AI is
- Examining AI’s impact on employment on a macro scale
- Covering compliance issues business leaders should keep top of mind
- Laying groundwork for ethical AI usage for HR team and employers.
We’ve also included insights from subject matter experts who covered AI’s impacts on personnel, employment, and communication challenges during a recent webinar!
What Exactly IS AI?
“Artificial intelligence” as we know it isn’t quite what AI of science fiction implies (yet). When most businesses talk about AI, they mean a handful of tools that analyze and process large amounts of data. This is called Generative AI. Tools like ChatGPT quickly process existing information and repackage it into something perceived as new to the end user. But at the end of the day, ChatGPT and similar tools need to be fed existing data first.
For HR professionals and business leaders, Generative AI opens doors to exciting opportunities: automating routine tasks, crafting personalized recruitment messages, or analyzing workforce needs to predict future trends — all with impressive speed and accuracy. It’s like having an assistant working behind the scenes to make your day-to-day responsibilities more manageable.
But it’s also worth noting that this technology isn’t without challenges. Generative AI is only as good as the data it’s trained on, which means it can reflect biases or make mistakes if not used thoughtfully. For HR leaders balancing the power of AI with compliance, ethics, and organizational goals is key.
How AI Impacts Work & Employment on a Macro Scale
While AI brings exciting opportunities to optimize workflows, it also raises questions about the future of work and how humans fit into an increasingly automated world.
Redefining Roles Across Industries
AI is an evolution that touches every corner of business, from manufacturing to retail to healthcare. Automation powered by AI helps companies streamline repetitive tasks, like data entry, scheduling, and even customer service chatbots. While this can increase efficiency and free employees to focus on strategic initiatives, it also means some traditional roles may evolve, or even disappear, as machines handle specific tasks faster and more accurately than humans.
However, this evolution doesn’t mean humans are being replaced; it means roles are shifting. For example, AI-driven automation in logistics still requires human oversight to manage exceptions, analyze data, and make crucial decisions. The emergence of “hybrid” roles, where employees use AI tools to enhance and expand their capabilities, is becoming the norm.
Chief Research Officer at Lighthouse Research & Advisory Ben Eubanks reminds us that automation shouldn’t replace what makes us most human.
“Any time in history when a wave of automation comes, the activities it focuses on are repetitive,” he said. “What automation leaves behind are the human skills—creativity, curiosity, critical thinking.”
Transform Your HR Processes
Discover how Namely can help your entire organization work smarter, adapt more quickly to change, and better plan for the future,
Get Started
Improving Productivity and Innovation
AI has the power to amplify human creativity, enabling workers and teams to accomplish more than ever before. From a productivity standpoint, AI removes roadblocks and takes repetitive tasks off employees’ plates. Imagine freeing up hours spent scheduling candidate interviews, writing job descriptions and posting, or going over spreadsheets and reports to spot data trends. Time saved can be dedicated to building programs that improve company culture or enhance professional development, implementing new processes that impact job satisfaction and the bottom line, or deepening connections with clients, partners, and colleagues.
As Eubanks points out, AI gives leaders an opportunity to invest in high-value work:
“Let’s get away from the low-value tasks and do more of the first: high-value activities like connecting with a new hire, coaching a leader who’s struggling, or hammering out a fresh idea that didn’t exist an hour ago in collaboration.”
Challenges in Workforce Transition
Of course, AI’s rise doesn’t come without challenges. For some industries, job displacement is a real concern. Workers in roles heavily reliant on routine tasks may find their skills less relevant, prompting concerns about wage stagnation or unemployment.
It’s here that HR professionals play a pivotal role. (We wrote a bit about the importance of HR in this balance in a previous blog!) Businesses can focus on proactive measures that prioritize employees during this transition, offering resources for retraining, transparent communication, and opportunities to grow into new roles created by AI adoption. Empathetic leadership and clear planning will help alleviate fears and build trust between your company and teams as you navigate these changes together.
Ethics, Equity, and Trust
AI’s widespread use also requires careful thinking around ethics. For HR leaders, the introduction of AI raises critical questions about fairness in hiring practices, performance evaluations, and even daily operations.
- How can we ensure AI algorithms are free of bias?
- How do we balance automation with human empathy?
- How will these algorithms impact equal employment opportunity compliance measures?
These are challenges that require diligence and accountability from employers and senior leaders.
Building trust between employees and AI systems is vital. HR leaders must champion transparency, ensuring workers understand how and why AI plays a role in decision-making. When employees feel confident that AI tools are being used responsibly, they’re more likely to embrace them as a partner in their work rather than as a threat to their livelihoods.
Compliance Challenges of AI within the HR Space
As AI continues to evolve and programs become more dynamic, business leaders will also face a growing need to stay on top of how each update affects existing programs and their workforce.
Bias and Discrimination
AI systems used in HR processes (e.g., recruitment, performance evaluation) may perpetuate biases if trained on skewed or incomplete datasets. In hiring, for example, the biggest hindrance for AI comes from resumes being discarded without a human ever glancing at a potential employee. Implicit biases and machine-generated errors can lead to misinterpretations or leaving out an “overqualified” candidate because of code. Roughly 35% of recruiters worry that AI may exclude candidates with the unique skills and experiences needed for a role. At worst, poorly trained AI can lead to discriminatory practices that violate equal employment opportunity (EEO) regulations.
Michele Lindsay, Director of Talent Management Solutions for Namely, states, “When you are communicating with your employees, from candidate through hire to developing them and eventually retirement, that touch is important. So, you really want to make sure that as you are hiring, onboarding, and developing, you’re still having those human conversations.”
Data Privacy and Security
AI implementations often require handling sensitive employee data, such as personal information from recruitment platforms or performance monitoring systems. Samsung’s exposure of company secrets due to employee use of ChatGPT, for example, is a great showcase of what not to do regarding AI in the workplace. HR leaders must comply with laws like GDPR or CCPA to protect customer and employee privacy and prevent misuse of data.
Accountability and Transparency
Employment decisions made by AI algorithms must be explainable, especially in cases of hiring, promotions, or disciplinary action. Regulations like the European Union’s AI Act lays out a framework that HR professionals need to ensure clarity in how AI systems make decisions to avoid legal challenges and instill trust among employees.
Compliance with Labor Laws
In April of 2024, the Department of Labor laid out guidelines for navigating AI within the workplace. The DOL warned businesses that going all-in on using AI rather than leveraging it as an assistive tool can push businesses into noncompliance. And while the latest administration rescinded some of those compliance measures, state governments in California, Utah, Colorado and others are pushing to create legislation to regulate the use of AI and mitigate the negative impact it could have on labor.
AI Governance, Oversight and Ethical Implications
HR leaders need governance frameworks to monitor AI in business operations. This includes establishing who is responsible for errors or adverse outcomes resulting from AI decisions and ensuring that AI tools align with company values and ethical standards. As Lindsay points out, AI-based tools are a tempting replacement for teams, but they should never outweigh relationship-based management of a team.
“There are fabulous tools out there to simplify the process of reaching out and engaging with your employees,” she explains. “But it’s really easy to slip into the, ‘Oh, I’m just going to let the automated emails take over,’ or ‘I’m just going to let AI create the documentation or the feedback for me.’ And you really want to make sure you’re balancing the two.”
Responsible AI Deployment: Building Ethical, Trustworthy AI
As AI becomes an integral part of the modern workplace, we should prioritize ethical principles, safeguard privacy and data, ensure algorithmic accountability, and maintain human oversight. Here’s how you can lead the charge:
Ethical AI Principles
Work with your team to design and deploy AI systems that embody fairness, transparency, accountability, and respect for human rights. Use international compliance efforts like the EU AI Act and national AI regulations to guide the foundations of those principles.
Privacy and Data Protection
As the steward of your organization’s data, it’s your responsibility to implement robust data protection measures and privacy safeguards. Collaborate with IT and legal teams to establish strict data governance policies and ensure compliance with regulations like GDPR. Your vigilance will protect your employees’ rights and prevent misuse of sensitive information.
Algorithmic Accountability & Human Oversight
AI algorithms can make or break decision-making processes, so it’s essential to ensure transparency and accountability. Partner with your AI experts to implement mechanisms for auditing, testing, and validating AI systems. It’s also crucial to maintain human oversight and control, especially in high-stakes situations.
Supercharging HR with Tech – The Role of AI in HR Processes
We’ve seen firsthand how AI can streamline routine, administrative HR tasks, but human connections will always reign supreme – in HR and in life. While AI and automation are powerful tools for streamlining tasks, surfacing data insights, and elevating employee experience, they can’t replace the emotional intelligence, empathy, and personal touch that define impactful HR.
If you’re looking for a team to help you keep ahead of compliance surrounding AI and elsewhere in your business, Namely is here!
Set the Standard for Excellence with Namely
Automate HR tasks, track regulations, and ensure compliance with Namely's strategic combination of HCM technology and Managed Services.
Learn More
