What Employers Need to Know About the New Executive Order on AI

On October 30, 2023, President Biden signed the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. This is not the Federal Government's first time addressing artificial intelligence (“AI”) regarding employment. In May 2022, Verified Credentials reported on announcements issued by the Equal Employment Opportunity Commission (“EEOC”) and the Department of Justice (“DOJ”), each giving guidance on the use of AI in making employment decisions.

The Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence directs employers to use AI responsibly. It “demands a society-wide effort that includes government, the private sector, and academia” for the use of AI in various of industries and purposes, including the use of AI for employment-related purposes such as hiring, performance evaluation, training, or compensation. It aims to advance innovation and competitiveness in the AI sector while ensuring ethical and responsible use of the technology across the country. President Biden remarked with a summary of the intended purpose before signing:

“This landmark executive order is a testament of what we stand for: safety, security, trust, openness, American leadership, and the undeniable rights . . . proving once again that America’s strength is not just the example of its power but the power of its example.”

This Executive Order also establishes new boards and task forces, requires federal agencies to each appoint a Chief AI Officer, and creates a new White House AI Council to coordinate the Federal Government’s AI activities. Let’s discuss some of the key points related to employment.

Setting a Foundation to Address AI Disruption in the Private Business Sector

The Executive Order is not a law but perhaps sets a precedent for the appropriate use of AI in business and employment. It calls upon the guidance of federal agencies in collaboration with AI experts in private sectors to set standards for the use of AI.

The Executive Order acknowledges the potential impact of AI on the labor market and the need to protect workers’ rights and interests. Clear and detailed guidelines for private businesses are not yet clarified. Still, knowing that regulatory and enforcement action is right around the corner signals that private businesses must consider employee and labor rights as AI is further integrated into the workplace.

Federal Agencies Ordered to Lead the Way in Preventing Job Discrimination

The Executive Order acknowledges that AI can be biased or discriminatory if not designed, developed, or deployed responsibly. Consequently, it requires Federal agencies to take steps to prevent employment discrimination spurred by the use of AI and further outlines expectations and responsibilities for many Federal agencies. Below are a few highlights:

• Department of Labor: The Department of Labor (“DOL”) is tasked with creating formal guidance aimed at employers to reinforce the ethical use of AI. The guidelines include specifications that AI cannot be used to track workers or their productivity in violation of existing fair labor and civil rights laws. Additionally, the DOL is directed to address job elimination and displacement risks related to AI. Finally, DOL is directed to publish guidance regarding nondiscrimination in hiring involving the use of AI.
• Department of Justice: DOJ must create an AI-focused plan for federal officials whose job is to investigate and take action against employers for alleged civil rights violations.

• Council of Economic Advisers: The Council of Economic Advisers (“CEA”), an executive agency that advises the President on economic policy, must report to the White House within 180 days how it believes AI will impact the labor market. The report must include job creation and loss projections by industry and occupation and recommendations for mitigating any adverse effects.

Additionally, investigators at the DOL, DOJ, and other federal agencies will receive special focused training on properly examining alleged AI-related civil rights violations.

Addressing Data Privacy Needs When Using AI

AI technology needs access to an immense amount of information to do its job well, and that information needs to be stored, transferred, and used securely.

The Executive Order addresses this situation by calling for the development of data-preserving techniques that allow AI models to train and learn without exploiting private data and cryptographic tools that preserve privacy. The Executive Order also pushes for identifying and mitigating privacy risks that the use of AI may exacerbate.

What’s Next for Employers?

The Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence does not create new law itself but does provide guidelines and structure for using AI in the Federal Government. Federal and state laws and administrative rules may be likely to follow.

Employers who use or plan to use AI for employment-related purposes should monitor the status and implementation of the Executive Order and prepare for possible compliance obligations. Employers may also want to consider discussing guidelines with their legal counsel to establish and maintain a relevant code of conduct for AI use. The entire Executive Order can be read here.