Artificial Intelligence (AI) is transforming the workplace. It offers immense potential for employers to enhance efficiency, decision-making, and overall performance. However, as AI is increasingly integrated into hiring decisions and other HR functions, employers must take note of the ethical and regulatory considerations that surround its use.
In this blog we review some of the potential benefits of the use of AI for employers as well as regulations considerations in using AI for hiring decisions.
Potential Benefits of AI for Employers
Enhanced Efficiency: AI can automate routine tasks, freeing up time for the HR team to focus on strategic activities. Ai can support activities such as sorting through resumes and scheduling interviews, both activities that typically consume significant resources.
Improve Decision-Making: AI systems can quickly and accurately analyze large volumes of data, providing insights that help employers make informed decisions. This includes identifying trends in employee performance, predicting future hiring needs, and optimizing workforce planning.
Bias Reduction: When properly designed and implemented, AI can help reduce unconscious bias in hiring decisions. AI can objectively evaluate candidates based on data rather than subjective impressions, leading to more fair and more inclusive hiring practices.
Cost Savings: Automating aspects of the hiring process can significantly reduce costs. AI can handle initial screenings, reducing the need for extensive human involvement until the later stages of the hiring process. The efficiency can translate into considerable savings.
Better Candidate Matching: AI-powered tools can analyze job descriptions and candidate profiles to identify the best matches, improving the quality of hires. By considering a broader range of factors, including skills, experience, and cultural fit, AI can help employers find candidates who are more likely to succeed in their roles.
Rules and Regulations Surrounding the Use of AI
While AI offers many benefits, its use in hiring is subject to various restrictions and regulations designed to ensure fairness and protect candidate rights. Employers must be aware of these to avoid legal pitfalls and ethical dilemmas.
Data Privacy Laws: Regulations like the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the U.S. impose strict requirements on how personal data is collected, stored, and used. Employers must ensure that AI systems comply with these laws, particularly when handling sensitive candidate information.
Anti-Discrimination Laws: In the U.S., the Equal Employment Opportunity Commission (EEOC) enforces laws that prohibit discrimination based on race, color, religion, sex, national origin, disability, and genetic information. AI systems must be designed to comply with these laws, avoiding biases that could lead to discriminatory practices.
Transparency and Accountability: Employers must be transparent about their use of AI in hiring decisions. Candidates should be information when AI is used to evaluate their applications and employers should be prepared to explain how AI decisions are made. This transparency is crucial for building trust and ensuring fairness.
Algorithmic Fairness: AI systems must be regularly audited to ensure that they are fair and unbiased. Employers should work with AI vendors who prioritize ethical AI development and are willing to provide insights into their algorithms’ workings.
Bias Mitigation: Employers must actively work to mitigate any biases in their AI systems. This involves continuous monitoring, testing, and updating of AI algorithms to ensure they do not perpetuate or exacerbate existing biases.
Beware of Evolving Regulations
To harness the benefits of AI while navigating its regulatory landscape, employers need to keep up to date with the latest regulatory landscape and best practices related to AI in hiring. The AI regulations are evolving – and vary by jurisdictions. Employers must constantly monitor to ensure that they remain aware of the most recent regulations. Additionally, employers must regularly audit AI systems to ensure that they are fair, unbiased, and compliant with relevant laws. Finally, success will require collaboration of all stakeholders – HR, legal, and IT teams – to ensure that the AI systems that are implemented reflect a holistic approach.
Where Can You Find Out More?
Using AI to remove bias from hiring decision-making:
Hospice agencies rely on the successful coordination of their teams to deliver quality care to their diverse customers and clients who have varying demands and needs. These teams are often highly diverse – with varying cultures, genders, and age ranges.
But simply combining individuals with different backgrounds is not sufficient to ensure customer satisfaction and client success. It also requires inclusive leadership – leaders that create an inclusive environment where team members feel that they belong and matter, where a diverse workforce is respected, and where team members with varying opinions and perspectives feel heard and respected and are willing to share, contribute, and collaborate.
What are the benefits of inclusive leadership?
Workplaces with inclusive leadership are not only nice to have; they are also shown to improve performance. Teams with inclusive leaders are 17% more likely to be high performing, 20% more likely to make high quality decisions, and 29% more likely to be more collaborative, as discussed in a study published by Deloitte.
What are the characteristics of inclusive leadership?
There are several traits that are commonly observed in inclusive leaders:
Commitment: See the value in diversity and inclusion and holds themselves, the team, and the organization accountable to ensure equality is factored into all processes
Humility: Modest about their capabilities, admit mistakes, and create space for others to contribute
Aware of bias: Aware of personal blind spots and flaws in the organizational processes, and work hard to ensure meritocracy
Cultural intelligence: Exceptional leaders stretch their curiosity and learn about customs that are important to different employees. They aim to boost the level comfort to build inclusivity.
Effective collaboration: Empower others and focus on team cohesion
Curiosity about others: Be curious and learn about other employees, acknowledge the value that each individual team member brings to the whole
How can leaders exercise these traits?
Leaders need to practice these traits and get regular feedback on their performance. How can they do this and how can they get regular feedback on their performance?
Establish a diverse personal advisory board – Leaders can create a group of peers with whom they have regular contact and who they know are willing to give them direct and straightforward feedback on day-to-day interpersonal behavior. Members of their advisory board can give them feedback on activities such as whether they are favoring certain groups, whether their language is language is biased, whether they are inclusive during meetings, and the like.
Leaders can immerse themselves in new/uncomfortable situations that involve diverse stakeholders, providing them with the opportunity to disrupt preconceived ideas.
They can share learning journeys that involve recognizing and addressing bias. This can be in the context of town hall meetings or 360 assessments with management. These settings allow a leader to role model the importance of humility.
Summary
Diversity is at the heart of every organization. If properly managed, it can enhance the success of an organization but if improperly managed, it can lead to dissatisfied employees and inability of an organization to achieve its goals. A successful leader must promote and encourage diversity in an organization, as this will draw out each individual employee’s talents and lead to improved organization success.
The Fair Labor Standards Act (FLSA), enacted in 1938, has four major provisions: regulations for minimum wage, overtime pay, record keeping and child labor law. It also introduced standards for exempt and non-exempt employees. As it relates to the FLSA, exempt means free from an obligation of overtime pay. Note that FLSA regulates the Federal standards; the states may have different regulations in each of these areas.
What is an exempt employee?
Exempt employees are not eligible for minimum wage, overtime regulations, and other protections that are extended to non-exempt employees. Exempt employees receive a set salary every pay period. Exempt employees are typically salaried workers and often fill executive, supervisory, or administrative positions.
Which employees are covered under the FLSA law?
Enterprise Coverage: If a business is covered then all employees of the business are entitled to FLSA protection. What businesses are covered under enterprise coverage?
Business has at least two employees and does sales of at least 500,000
Named enterprise coverage: Hospital, business providing medical or nursing care for residents, school, preschool, or public agency, whether private or non profit
Individual Coverage: Individual employees in an organization may be entitled to FLSA protection even if the entire organization is not entitled to FLSA protection
Individual is engaged in activity that involves working across state lines (interstate business) on a regular basis
Domestic service workers (e.g., housekeeper, cook, babysitter)
Should an employee be classified as exempt or non-exempt?
An employer should consider all employees as non-exempt and overtime eligible unless they can meet a specific exemption under federal or state law
An employee who remains in the same job position should not move back and forth between exempt and non-exempt. Further, an employer cannot decide that they want to make an employee exempt. The regulations determine FLSA classification.
Job title does not determine classification
Employers must correctly classify their employees as exempt or non-exempt or they run the risk of accruing compliance violations.
Can any worker qualify as an exempt employee?
An employer may wish to classify all employees as exempt employees – in this way avoiding the requirement to pay time and a half for overtime hours worked. However, not all employees are eligible to be classified as exempt employees.
The Department of Labor (DOL) has established guidelines to determine who is eligible to be considered exempt. The qualifications generally fall into three categories: salary exemption, nature of payment, and job duties. An employee must pass the tests in all three categories to qualify for exempt status.
Exempt employees test #1: total earnings
The first test to qualify an employee for exempt status is that the employee must earn the salary threshold set by the FLSA to be exempt. The minimum salary threshold of the FLSA changes every year. In 2021, the required minimum employee compensation to have exempt status was $684 per week ($35,568 per year). This salary threshold must be met regardless of being part time or full time. If the salary threshold is not met, the employee may not be classified as exempt (with an exception for teachers, doctors, and lawyers).
Exempt employees test #2: nature of payment
The second test to qualify an employee for exempt status is that the employee must be paid on a salaried basis, where compensation is not reduced due to quantity or quality of work.
Exempt employees test #3: job duties
The third test to qualify the employee for exempt status is whether the employee meets the job duties that qualify for exempt status. There are only certain job duties that qualify an employee for exempt status. These job duties involve a higher level of expertise or knowledge or require the employee to hold certain professional roles. There are several categories of job duties exemptions:
Executive exemption: employees who would qualify for an executive exemption would
Regularly supervise employees
Be responsible for managing part of the business
Play a role in hiring employees or in delegating tasks
Administrative exemption: employees qualifying for an administrative exemption would
Perform office jobs directly related to business operations or management of the organization and its customers
Exercise independent judgement over business decisions
Professional exemption: employees qualifying for a professional exemption would
Perform job duties that require specialized education
Have a college degree or higher in their field
Computer exemption: employees with this exemption would
Have a computer related role
Outside sales exemption: employees qualifying for this exemption would
Have a primary duty of making sales or securing contracts or orders
Conduct their work outside of the business’ premises
When should a worker be classified as an employee versus as an independent contractor?
What is the difference between these two types of workers? Why is it important for a hospice agency to properly classify the workers who are providing services? Why is it important to determine whether the workers providing services are independent contractors or employees?
Why would an employer want to classify workers as independent contractors instead of employees?
A business must withhold income tax, withhold and pay social security and Medicare, and pay unemployment taxes on the wages paid to employees – but not those paid to independent contractors. By classifying workers as independent contractors, an employer can avoid payroll taxes, unemployment insurance and workers compensation coverage. The employer can also save on the cost of all the benefits that are offered to employees but are not offered to independent contractors.
Are there consequences to misclassifying workers?
The IRS is increasing its efforts on auditing companies, with a particular focus on worker classification. The liability from an employment tax audit that identifies misclassified workers may be quite significant. A business that classifies workers as independent contractors instead of employees may be subject to retroactive tax withholding, penalties, and interest.
How can an agency differentiate between an employee and an independent contractor?
An employee is typically a person who is providing services where the employer controls what services are provided and how the services are provided. Specifically, the employer has the right to control the details of how the worker performs the tasks. There are three key areas to consider when evaluating whether a worker is an employee or an independent contractor:
Behavioral control: Is the worker free from control or direction over performance of the tasks? Or, does the employer have the right to control how the worker performs the tasks?
Financial control: Is the worker engaged in independently established business or occupation? Or, does the employer control the financial and business aspects of the worker’s job? For example, does the employer control how the worker is paid? Does the employer provide the supplies and the tools that the worker requires to complete the tasks?
Relationship between the parties: Does the employer provide the worker with benefits such as insurance, vacation pay, or pension plan? Are the services that are performed a key aspect of the business?
By considering the different aspects of behavioral control, financial control, and the relationship between the two parties, and employer can determine whether a worker is more appropriately classified as an employee or as an independent contractor. Each of these three key areas involves multiple factors. Determination of whether a worker is an employee or an independent contractor is not an objective test and some of the factors are more important than the others, depending upon the industry and type of independent contractor being evaluated.
A Form I-9, also known as an Employment Eligibility Verification form, is a form required by the U.S. government for each employee. The information on this form and its supporting documentation:
Verifies the employee’s identity
Verifies the employee’s eligibility to work in the U.S.
When must the Form I-9 be completed?
The Form I-9 is completed as part of the new hire paperwork provided by an employer during the hiring process.
Each new employee must complete and sign the Form I-9 employee section by the end of their first day of employment. The employer must complete and sign the employer sections by the end of the new employee’s third day of employment.
The employer must verify the employee’s eligibility and identification documents and record the document information on the Form I-9. Employees must present original documents, not photocopies, for verification.
Who is required to complete an I-9?
An employer must fill out and retain an I-9 form for all employees, whether or not they are U.S. citizens.
Are there instances where an I-9 form is not required?
A Form I-9 is not required for an independent contractor. A Form I-9 is also not required for employees hired on or before November 6, 1986.
What should you do if you do not receive an I-9 form?
A Form I-9 is required for continued employment. An employer that does not maintain these forms may face fines or criminal penalties.
If an employee fails to provide his employer with the necessary documentation or receipt for a replacement document within three business days of start of employment, the employee can be terminated. If an employee provides a receipt for replacement of missing documents, he has 90 days to present the replacement documents.
Must an employer retain the I-9 form?
An employer must store the Form I-9 and supporting documents together. The employer must ensure that only authorized personnel have access to the stored forms. The forms must be available within 3 days of an official request for inspection.
The forms must be retained for either three years after an employee’s start date or one year after their termination, whichever is later.
Managers often avoid “uncomfortable” feedback discussions
Managers often shy away from providing tough feedback to their employees. Or, if they do sit down for these difficult discussions with their employees, the discussions dissolve into arguments and finger pointing – by the manager, the employee, or both.
The key is providing effective feedback
But avoiding providing feedback to the employee is not the solution. Typically, when a manager observes an undesirable behavior, this behavior only escalates and the situation worsens – often to the point that the relationship cannot be salvaged. Rather than trying to ignore undesirable behavior, the key is providing effective feedback.,
Why is effective feedback important?
Effective feedback can be the difference between sparking growth and development in an employee, resulting in an employee who contributes positively to the team versus and employee who feels diminished and reduces their contribution to the organization.
What are key aspects of effective feedback and how can you maximize likelihood of employee success?
Effective feedback will encourage the employee to self reflect and lead to growth and development, rather than encouraging denial and self-preservation.
Provide constructive criticism, that helps the employee understand where they need to improve and why the improvement is important. Identify the problem and a plan to help the employee improve. The employee can be invited to help find solutions, so that they are a partner in the solution.
Once you deliver feedback, be sure to follow up. It’s not sufficient to simply tell the employee what they need to improve upon. You need to give them a plan to follow, targets and goals to achieve, and then check in to help them stay on track. Offering ongoing feedback is helpful – with more feedback and check-ins earlier on in the process.
It is important that a manager is honest with employees. If an employee is underperforming, a manager has a responsibility to let the employee know and to give them a framework and tools to improve their performance.
