Artificial intelligence (AI) has made its way into workplaces nationwide and is rapidly changing how organizations operate and make decisions. In some cases, employees may be using AI tools without their employers’ permission or knowledge. While this technology presents opportunities — such as enhanced workflows, streamlined operations and improved customer experiences — it also has limitations and exposures employers must consider. Establishing workplace policies can help organizations understand and guard against the potential legal, business and reputational risks associated with AI tools. Now is the time for employers to consider how best to create and enforce policies that address AI use in the workplace.

General Considerations

Many employers use AI systems to sort resumes, create job postings, streamline hiring and onboarding and automate HR functions. While these tools can improve operational efficiency, they also present risks. For example, AI algorithms may unintentionally reinforce biased or discriminatory hiring practices. Increased AI monitoring of employee activities can also raise privacy concerns. As AI integration becomes more widespread, anticipating potential workplace issues becomes increasingly important.

Despite the risks, laws and regulations have not kept pace with employers’ use of AI technology. Although several existing laws address AI‑related issues the technology remains a relatively new legal area. A patchwork of federal and state regulations addresses certain aspects of AI use in employment, but legal issues will likely continue to emerge as these tools advance.

Because AI in the workplace is largely unregulated, employers must navigate many gray areas. They can establish governance policies and procedures to evaluate and monitor AI tools and assess their long‑term impacts. Understanding how AI tools are used can help employers build effective policies. Some existing workplace policies may already address certain risks, but employers may need to revise them to cover AI‑specific concerns. This helps ensure responsible and transparent use of AI in ways that complement human work.

Employers operating in multiple states must also consider compliance challenges, as AI-related laws vary. In some jurisdictions, workplace use of AI tools may be restricted or regulated differently. Organizations should develop policies that account for these differences.

Adopting AI tools may also lead some employees to feel their jobs are at risk. Employers should understand how introducing this technology affects employee well-being and consider ways to support workers through the transition. This may include establishing policies, educating employees and providing training on the roles and limitations of AI tools. With this in mind, it’s essential that organizations put related policies and procedures in place before fully adopting AI technology.

Data Privacy and Surveillance

AI tools can collect and analyze data to increase workforce and organizational productivity. These insights can guide employers’ decisions or help track performance. However, employers must balance these benefits with employees’ privacy rights and implement policies that clearly outline how data is collected and used.

Several jurisdictions require consent or notice for certain types of electronic monitoring. New York, Delaware and Connecticut require employers to notify employees about electronic monitoring. Other states have enacted consent and notice requirements for using AI in interviews. For example, Maryland prohibits the use of facial recognition software during interviews unless the interviewee signs a waiver.

Clear policies can help ensure AI‑based monitoring does not become intrusive or expose confidential information. Employers should also be transparent with applicants and employees about how AI tools are used.

Copyright and Intellectual Property Rights

AI‑generated content may violate copyright laws or infringe on third‑party intellectual property rights. Conversations with AI chatbots may be reviewed by AI trainers, potentially exposing confidential information or trade secrets to third parties and creating legal risks.

Employers should evaluate how AI-generated content is protected and who holds the rights to that content. They should also update confidentiality and trade secret policies to include third‑party AI tools. Training employees on copyright and intellectual property risks is also essential to ensure protected or sensitive data is not used as input. Limiting access to AI tools can further reduce legal exposure.

Anti-discrimination Concerns

Using AI tools may lead to intentional or unintentional discrimination, resulting in lawsuits or investigations. AI algorithms used in employment decisions may rely on historical data that embeds bias, potentially benchmarking resumes or qualifications based on age, race, gender or national origin.

The U.S. Equal Employment Opportunity Commission (EEOC) identified AI as a priority topic in its 2023–27 Strategic Enforcement Plan and has issued guidance to help employers ensure AI tools do not violate federal civil rights laws. In 2023, the EEOC also launched the Artificial Intelligence and Algorithmic Fairness Initiative.

While many employers already have anti-discrimination policies, additional measures — such as conducting bias audits — can help evaluate whether AI tools have disparate impacts on protected groups. Employers should also review AI‑based compensation tools to ensure compliance with pay equity laws and hold vendors to the same standards.