EEOC Issues Nonbinding Guidance On Permissible Employer Use Of Artificial Intelligence To Avoid Adverse Impact Liability Under Title VII

• Published date: 02 June 2023
• Law Firm: K&L Gates
• Author: Ms Rosemary Alito, Erinn Rigney, Timothy J. Nichols and Taylor Arluck

On 18 May 2023, the US Equal Employment Opportunity Commission (EEOC) issued nonbinding guidance on how existing federal anti-discrimination law may apply to employers' use of artificial intelligence (AI) when hiring, firing, or promoting employees (the EEOC AI Disparate Impact Guidance). The EEOC AI Disparate Impact Guidance aims to assist employers when using AI for such "selection procedures" to avoid disparately or adversely impacting protected groups under Title VII and incurring any related liability.¹

The EEOC AI Disparate Impact Guidance is notably limited in scope because it does not address Title VII's or other federal employment laws' separate prohibition on employers intentionally discriminating against employees based on their protected characteristics, including race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), or national origin, nor does it address validation of the selection procedure in the event adverse impact is found.

Nevertheless, as discussed further below, employers currently or intending to use AI'especially AI created by third-party vendors'as part of their employment selection procedures should consider the EEOC AI Disparate Impact Guidance before implementing such procedures to avoid potential disparate impact liability under Title VII.

Title VII Disparate Impact

Title VII prohibits "disparate" or "adverse" impact discrimination. This prohibition precludes employers from using facially neutral selection procedures or tests that have the effect of disproportionately excluding persons protected by Title VII if the tests or selection procedures are not "job related for the position in question and consistent with business necessity."² There is a three-pronged test for analyzing disparate impact:

1. Does an employer use a particular employment practice that has a disparate impact on a group protected by Title VII?
2. If there is a disparate impact, are the selection procedures or tests job-related and consistent with business necessity?
3. Even if the selection procedures or tests are job-related and consistent with business necessity, is there a less discriminatory alternative available?³

The EEOC AI Disparate Impact Guidance relates only to item (1).

The long-standing Uniform Guidelines on Employee Selection Procedures (the "Guidelines") under Title VII, which have been in place since 1979, provide EEOC guidance to employers about how to determine if their selection procedures or tests are legal under a Title VII disparate impact analysis.⁴

The EEOC AI Disparate Impact Guidance

The EEOC AI Disparate Impact Guidance...