May 7, 2024Client Alert

New Guidance for Federal Contractors Using Artificial Intelligence (AI) in Hiring

On April 29, 2024, the OFCCP released a series of FAQs outlining the requirements covered federal contractors must meet when using AI systems for hiring and related employment purposes to ensure they are maintaining compliance with Equal Employment Opportunity (EEO) obligations. Covered federal contractors are obligated by law to ensure that they do not discriminate in employment and that they take affirmative action to ensure employees and applicants are treated without regard to their race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran. If not designed and implemented properly, OFCCP warns that AI systems have the potential to embed bias and discrimination into a range of employment decision-making processes.

OFCCP’s guidance outlines several affirmative obligations that federal contractors should be aware of, including:

  • Maintaining records for resume searches and substantive search criteria—regardless of whether the resume search is from an external website or internal resume database—and ensuring the confidentiality of those records.
  • Cooperating with OFCCP by providing the necessary, requested information on AI systems.
  • Making reasonable accommodations for known physical or mental limitations of an otherwise qualified applicant or employee with a disability.

The OFCCP’s guidance also offers federal contractors some best practices for using AI systems, including providing notice when using AI in the hiring process and ensuring that the AI system interfaces, data inputs, and outputs comply with accessibility standards for people with disabilities.

Additionally, OFCCP clarified that federal contractors are responsible for the use of third-party products and services, such as a staffing agency, HR software provider, or vendor. So, even when using another entity’s AI products or services, federal contractors cannot delegate nondiscrimination and affirmative action obligations. As such, federal contractors cannot escape liability for the adverse impact of discriminatory screenings conducted by a third party. OFCCP’s guidance discusses the best practices for hiring a vendor-created AI system to be in compliance with EEO obligations and the requirements federal contractors should be able to verify, including:

  • the transparency and explainability of the AI system;
  • any differences between the data that the AI system was trained, developed, and validated and the contractor’s candidate pool or labor market;
  • the screening tools and data used to filter in or prioritize candidates, such as job skills or keywords, as well as any data used to filter out candidates with gaps in employment history;
  • the vendor’s data protections and privacy policies;

Within its guidance, OFCCP has made it clear that it will be executing evaluations and complaint investigations to ensure federal contractors using AI in their employment decisions are in compliance with nondiscrimination obligations. OFCCP also recently updated its compliance review process to require documentation to better identify discrimination related to AI systems by federal contractors.

Federal contractors considering implementing AI systems for hiring or employment decisions should conduct due diligence on the third party provider of the AI system and use the OFCCP guidance above to evaluate whether or not the AI system is appropriate for use by federal contractors.

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