On May 18, 2023, the Equal Employment Opportunity Commission (EEOC) released a Technical Assistance Document (TAD), to help employers understand how Title VII of the Civil Rights Act of 1964 applies to the use of automated systems, including those that use artificial intelligence (AI) in employment decisions, specifically in hiring, promoting, and firing.
Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin religion, or sex (including pregnancy, sexual orientation, and gender identity). The TAD explains that employers can be held responsible for discrimination that occurs as a result of the use of automated systems, even if the systems are developed or administered by a third party.
The TAD provides guidance on how employers can assess whether their use of automated systems has an adverse impact on protected groups. An adverse impact occurs when a selection procedure results in a substantially lower selection rate for members of a protected group than for members of a non-protected group.
The TAD also provides guidance on how employers can develop and use automated systems in a way that complies with Title VII. The Questions and Answers section addresses the following questions with the EEOC’s responses summarized here:
Can an employer's use of an algorithmic decision-making tool be considered a "selection procedure?"
Yes, an employer's use of an algorithmic decision-making tool can be considered a "selection procedure" under Title VII (see Uniform Guidelines on Employee Selection Procedures (UGESP)). This means that the employer could be held liable for discrimination if the tool has an adverse impact on a protected group.
Can employers assess their use of an algorithmic decision-making tool for adverse impact in the same way that they assess more traditional selection procedures for adverse impact?
Yes, employers can assess their use of an algorithmic decision-making tool for adverse impact in the same way that they assess more traditional selection procedures by checking whether the use of the procedure causes a selection rate for individuals in the group that is “substantially” less than the selection rate for individuals in another group (see the four-fifth rule below). If the use of an algorithmic decision-making tool has an adverse impact on individuals in a protected class, then its use will violate Title VII unless the employer can show that such use is “job-related and consistent with business necessity” pursuant to Title VII.
Is an employer responsible under Title VII for its use of algorithmic decision-making tools even if the tools are designed or administered by another entity, such as a software vendor?
Yes, an employer could be held liable under Title VII for its use of algorithmic decision-making tools even if the tools are designed or administered by another entity. If the tool should be expected to result in a substantially lower selection rate for individuals of a particular protected class, then the employer should consider whether the use of the tool is job-related and consistent with business necessity and whether there are alternatives that may meet the employer’s needs and have a less of a disparate impact. The employer is ultimately responsible for the decisions that are made using the tools.
What is a "selection rate?"
A "selection rate" refers to the proportion of applicants or candidates who are hired, promoted, or otherwise selected. The selection rate for a group of applicants or candidates is calculated by dividing the number of persons hired, promoted, or otherwise selected from the group by the total number of candidates in that group.
What is the "four-fifths rule?"
The four-fifths rule, as referenced in the UGESP, is a "general rule of thumb" for determining whether the selection rate for one group is "substantially" different than the selection rate of another group. The rule states that a selection procedure is considered to have an adverse impact if the selection rate for members of a protected group is less than four-fifths (80%) of the selection rate for members of a non-protected group.
Does compliance with the four-fifths rule guarantee that a particular employment procedure does not have an adverse impact for purposes of Title VII?
No, compliance with the four-fifths rule does not guarantee that a particular employment procedure does not have an adverse impact for purposes of Title VII. The four-fifths rule is just a "general rule of thumb" and there may be other factors that could lead to a finding of adverse impact.
If an employer discovers that the use of an algorithmic decision-making tool would have an adverse impact, may it adjust the tool or decide to use a different tool in order to reduce or eliminate that impact?
Yes, if an employer discovers that the use of an algorithmic decision-making tool would have an adverse impact, it may adjust the tool or decide to use a different tool in order to reduce or eliminate that impact. Failure to do so could lead to liability under Title VII.
The EEOC encourages employers to conduct self-analyses on an ongoing basis to determine whether their employment practices have a disproportionately large negative effect on a basis prohibited under Title VII or treat protected groups differently. The TAD notes that generally, employers can proactively change the practice going forward. Employers should consult their IT personnel and/or software vendor.
The TAD is part of the EEOC’s Artificial Intelligence and Algorithmic Fairness Initiative which works to ensure that software, including AI, used in hiring and other employment decisions complies with the federal civil rights laws that the EEOC enforces. It builds upon previous EEOC releases of technical assistance on AI and the Americans with Disabilities Act and a joint agency statement made by the EEOC, the Department of Justice, the Bureau of Consumer Financial Protection, and the Federal Trade Commission affirming that their respective enforcement authorities apply to automated systems.
Further information about the EEOC is available at its website at https://www.eeoc.gov/. HEC Members may contact their HR Consultants regarding specific issues in their workplace.