Navigating Workplace AI When Federal and State Policies Clash
Lawmakers at federal, state, and local levels are actively proposing legislation aimed at regulating and understanding artificial intelligence (AI) in employment-related decisions. As the AI regulatory landscape evolves, employers must stay informed and compliant with these changing policies.
Recent Legislative Efforts
Two significant legislative efforts are currently in focus:
- U.S. Senate Bill: A bipartisan bill requiring certain companies to report on personnel decisions influenced by AI.
- U.S. House Bill: A bipartisan bill mandating human oversight and disclosure of AI tools used in employment decisions.
These proposals may conflict with a recent executive order from the White House promoting a minimally burdensome national framework for AI regulation.
The Senate Bill: Quarterly Updates on AI’s Impact on the Workforce
Introduced on November 5 by Sens. Josh Hawley (R-MO) and Mark Warner (D-VA), the AI-Related Job Impacts Clarity Act aims to enhance transparency regarding AI’s effects on the workforce. The bill requires covered entities to file quarterly reports to the U.S. Department of Labor detailing:
- The number of employees laid off due to AI automation.
- The number of employees hired as a result of AI adoption.
- The number of job vacancies not filled due to AI-driven changes.
- The number of employees retrained for AI-related roles.
The bill seeks disclosures from both publicly traded and certain private companies, with regulations to be established within 180 days of passage.
Implications for Employers
Employers should consider their readiness to meet reporting obligations, including:
- Identifying who will assess AI’s impact on personnel decisions.
- Determining how to track AI’s influence on staffing decisions.
- Ensuring internal systems can document AI’s effects.
A proactive assessment of decision-making processes and data management is essential for compliance.
The House Bill: Human Oversight and Disclosure of AI Tools in Employment
Following the Senate’s push for transparency, the No Robot Bosses Act of 2025 was introduced on December 3 by Reps. Suzanne Bonamici (D-OR) and Chris Deluzio (D-PA). This bill would apply to employers with 11 or more employees and requires:
- Auditing AI tools for discrimination and bias.
- Providing independent human oversight of AI-generated decisions and recommendations.
- Disclosing the use of AI tools in employment-related decisions to employees.
The future of this legislation remains uncertain amid ongoing debates about AI regulation.
State Laws Regarding AI
Many jurisdictions, including California, Colorado, Illinois, New York City, and Texas, have enacted AI regulations affecting employment decisions. These laws generally aim to prevent discrimination and require transparency:
- California and Texas prohibit discriminatory use of AI.
- Colorado, Illinois, and New York City mandate disclosure of AI use in hiring.
- New York City requires AI tools to undergo annual bias audits.
Employers must adapt their practices to comply with these laws, especially when hiring in states with such regulations.
The White House’s Executive Order
Amid these legislative efforts, the White House issued Executive Order No. 14365, criticizing “excessive state regulation” of AI and advocating a national policy framework. The order directs the creation of an AI litigation task force to challenge state laws conflicting with national objectives.
Employers must comply with existing state laws while awaiting further federal guidance as the AI regulatory landscape continues to evolve.
The Bottom Line
The ongoing legislative developments reflect bipartisan interest in understanding AI’s implications in the workplace. Employers are encouraged to monitor their AI usage and stay informed of federal and state law changes to ensure compliance and prepare for future regulations.
