Artificial Intelligence (AI) is reshaping how we recruit, retain, and manage people — but are your HR tools helping or hurting your compliance efforts?
With the rise of automated hiring platforms and AI-powered screening tools, HR and employee relations teams are understandably exploring ways to streamline workflows. But before you adopt (or continue using) these tools, it’s critical to understand how AI intersects with discrimination law and how emerging regulations could expose your organization to risk.
Here’s a round up of what’s happening in this space:
In New Jersey:
The NJ Attorney General’s Guidance on Algorithmic Discrimination (January 2025) makes clear: AI tools used in hiring or employment decisions are subject to the same anti-discrimination protections under the NJ Law Against Discrimination (NJ LAD) as any human decision-maker.
Takeaway: If your AI tools create biased outcomes, even unintentionally, your company may be liable.
A Cautionary Tale: iTutorGroup
NJ’s guidance points out that in 2023, the EEOC settled with iTutorGroup for using AI to automatically reject women over 55 and men over 60 during the application process. The company was found to have hard-coded age-based discrimination into its system. This case set the tone for federal enforcement around AI bias.
The guidance provides that employers subject to NJ LAD should examine their HR practices in several areas where AI tools may be prevalent. If an employer is utilizing AI in hiring and screening through automated decision-making tools, it should evaluate and audit whether the AI tool contributes to discriminatory outcomes.
The Workday Class Action Lawsuit to Watch
In May 2025, a federal judge allowed a class action against Workday to move forward. The case, filed by Derek Mobley, alleges that Workday’s AI-driven applicant screening tools disproportionately disadvantaged applicants on the basis of race, age and disability. It’s one of the first major lawsuits challenging bias within a major HR software platform — and discovery is underway.
His lawsuit argues that Workday’s algorithms and AI screening tools, which sort, score, and rank candidates for employers, had a disparate impact on applicants over 40. He further alleged that the embedded AI effectively guided employers on who to consider and who to reject — and did so in a way that favored certain demographics over others.
In May 2025, a federal court allowed Mobley’s case to move forward as a nationwide collective action under the Age Discrimination in Employment Act (ADEA). Discovery is underway, and the case could set major precedent for how AI tools are regulated in hiring decisions.
States Are Catching Up Fast
California’s Privacy Protection Agency (CPPA) has released draft regulations on “Automated Decision Making Technology (ADMT).” These rules would:
- Require advance notice before using ADMT in hiring
- Give applicants a right to opt out
- Mandate transparency about how scores or screening data were used in a hiring decision
The rules stipulate that these regulations would apply to business owners using ADMT to facilitate their decisions, as well as though business owners using AI to make the ultimate decisions.
So, what should your HR team be doing right now?
Audit your AI tools
Where are you currently using AI — directly or through vendors — in hiring, retention, or other HR processes?
Request or conduct bias testing
Has the AI been audited for bias? If not, you may be exposed. A bias audit and showing steps taken to ensure fairness could be key to defending future claims.
Review your vendors’ practices
Ensure your third-party tools retain data, provide transparency, and comply with privacy and anti-discrimination laws.
Train your HR teams
Your team needs to understand how AI works, where bias creeps in, and what legal obligations apply. That’s where Culturupt can help.
Need support? We’ve got you.
At Culturupt, we help employers get ahead of these issues — not react after the fact.
We offer:
- Thoughtful discussions with your HR and business leaders about using AI in an ethical and compliant manner
- Customized anti-bias AI training for HR and leadership
- AI audits of hiring and HR systems
- Guidance on compliance with state and federal laws, EEOC expectations, and state privacy laws
Have a great rest of your summer,
Ritu Pancholy
Founder & CEO, Culturupt
