Legislation Reshaping AI in Hiring, Veteran Resources, and Freelance Worker Protections
Rhode Island, Michigan, and other states have recently introduced employment laws that will impact hiring practices, particularly around the use of artificial intelligence (AI) in recruitment.
Other legislative measures also emphasize ensuring veterans’ rights are protected and expanding protections for freelance workers. For HR professionals and hiring managers, it is crucial to stay informed about these developments to ensure compliance and reduce legal risks.
AI, Discrimination, and Bias in Hiring: What’s New?
Artificial Intelligence is transforming the hiring landscape. While AI offers many benefits – such as reducing recruitment costs, improving efficiency, and enhancing candidate sourcing – its use has raised concerns about the potential for bias and discrimination. In response, both Rhode Island and Michigan have introduced new laws that govern how AI can be used in hiring and employment decisions.
Rhode Island’s AI in Hiring Law
Rhode Island’s approach is designed to strike a balance between leveraging AI technology and maintaining fairness in hiring practices. Effective in 2025, Rhode Island employers using AI-powered tools for screening candidates must ensure that these tools do not perpetuate bias based on protected characteristics, such as race, gender, age, or disability. The law mandates that companies must regularly audit their AI systems for biases and disparities in outcomes. If discrepancies are found, the employer must make efforts to rectify them, potentially by modifying the AI algorithm or adjusting hiring practices.
Furthermore, the law requires that candidates are notified when AI is being used to assess their qualifications, ensuring transparency in the recruitment process. For HR professionals and hiring managers in Rhode Island, this means there must be an ongoing effort to review and update AI tools to ensure they are compliant with this new regulation. While AI can speed up the recruitment process, it’s essential to understand how these algorithms function and whether they could inadvertently disadvantage specific groups of people.
Michigan’s AI Employment Law
Michigan’s new AI regulations focus on increasing accountability and transparency around AI-driven hiring decisions. The state law, effective January 2025, requires companies to inform job candidates when AI tools are used to assess their qualifications, much like the Rhode Island regulation. Additionally, Michigan mandates that employers must disclose the specific data points the AI system uses to make hiring decisions, giving candidates a clearer picture of how they are being evaluated.
One key component of Michigan’s regulation is the requirement for employers to prove that their AI systems are free from discriminatory biases. This includes conducting regular audits, both internally and externally, to assess whether the algorithm disproportionately impacts certain groups. If biases are found, companies are required to take corrective actions, which could include retraining AI systems or opting for human intervention in certain decision-making processes.
Accountability and Compliance
For hiring managers and HR professionals in Michigan, the introduction of these laws means a shift toward greater transparency and accountability. It is vital for HR teams to work closely with technology partners who design or manage AI recruitment tools to ensure compliance and avoid potential legal issues.
The new laws reflect growing concerns about how AI can perpetuate bias as well as working with freelancers and veterans.
AI systems are trained on historical data, which may include inherent biases, leading to discriminatory outcomes. For example, if past hiring decisions favored a certain demographic, AI algorithms may unintentionally prioritize candidates who fit that same profile, which may lead to an unbalanced workforce.
By requiring transparency, regular audits, and corrective actions, these laws aim to mitigate the risk of biased hiring practices. HR departments will need to ensure that their recruitment tools and algorithms are continuously monitored for fairness and adjusted accordingly. Moreover, transparency in AI usage builds trust with candidates, who may otherwise feel they are being unfairly assessed by machines.
Freelance Worker Protection Acts
Illinois, New York, and California have also recognized the growing importance of protecting freelance and gig economy workers, with California’s Freelance Worker Protection Act taking effect on January 1, 2025. Freelancers often lack the protections afforded to full-time employees, such as benefits, job security, and proper pay. These laws aim to level the playing field for freelance workers, offering them enhanced protections in areas like pay, contracts, and dispute resolution.
When working with freelancers, it’s more imperative than ever to know how to differentiate them from employees, what can and cannot be legally enforced in their contracts and ensuring timely payments.
Veteran Resources Notification Acts
At the Federal level, new measures are now designed to improve access to veteran resources.
The Veteran Resources Notification Act requires employers to notify veterans of their right to certain employment-related benefits. This includes notifications about job placement services, training programs, and other resources provided by the state or federal government. Employers must provide veterans with access to these resources during the hiring process, ideally at the time of their employment offer or shortly thereafter.
For HR professionals, this act highlights the importance of ensuring that veterans are not overlooked in hiring processes and that they are provided with the resources and support necessary to transition into civilian employment. HR teams should ensure that they are compliant with the act, which may involve working with veteran-focused organizations or adding specific language to job offer letters and employee handbooks. Hiring managers should be trained to recognize and remove any unconscious biases that may exist in hiring processes for veteran applicants.
For veterans, employers must ensure that notices are placed in rooms all workers have access to and/or online in a central hub that all employees have access to.
Adhere and Adjust
As these new laws are implemented throughout 2025, HR professionals and hiring managers must stay informed and take proactive steps to ensure compliance. Whether it’s auditing AI recruitment tools for bias, notifying veterans of available resources, or adhering to freelance worker protection laws, there are many considerations that impact hiring practices. By understanding these new regulations and adjusting your recruitment processes accordingly, you can help create a more inclusive, equitable, and legally compliant workplace while fostering trust with all candidates and workers.
As legislation changes, companies and universities may find themselves wondering if they are compliant. As a top workforce solutions consultant, nextSource can help you sort through your temporary workforce to ensure that you are compliant.