This is the second installment in our AI in the Workplace series, where we explore the rapidly evolving landscape of artificial intelligence and its impact on employers. In Part 1, we examined worker surveillance and FCRA liability. Now, in Part 2, we shift our focus to the broader legal uncertainties surrounding AI adoption in employment practices.
Artificial Intelligence (“AI”) is moving faster than the law can keep up. The race to adopt AI has created a new Wild West — high risk, high reward, and almost no rules. As AI continues to redefine industries and workplaces, legislation surrounding the use of AI remains surprisingly underdeveloped. In the absence of clear federal guidance on how AI should be used in employment practices, states have started to step in, but the resulting framework of policies is leaving employers without a consistent standard to follow. Pennsylvania Governor Josh Shapiro is trying to position Pennsylvania as a leader in AI innovation, but his recent initiatives still leave major gaps for employers navigating this new terrain. For employers trying to stay compliant, the digital gold rush feels more like a legal minefield.
Pennsylvania’s Push for Innovation
AI is unlocking exciting and innovative opportunities for employers, and Pennsylvania Governor Josh Shapiro is leading the Commonwealth to embrace the 21st century technology.
As recently as March 21, Governor Shapiro joined labor leaders in the Commonwealth to announce the positive findings of the General AI Pilot Program — the first program of its kind in the country. Launched at the start of 2024, the program showed that state workers saved an average of 95 minutes a day using ChatGPT for tasks such as writing, research, summarization, and IT support.
Governor Shapiro began his push for responsible AI integration with a 2023 executive order establishing core values for the responsible and ethical use of generative AI in state agencies. The order mandates a governance structure to ensure transparency and test for bias, and it created the Generative AI Governing Board. Furthering these efforts, Governor Shapiro entered an agreement at the end of 2024 with InnovateUS to train state employees on the ethical use of AI.
Despite the executive push, legislative progress in Pennsylvania has been slow moving. House Bill 594 (“HB 594”) is currently the only bill pending in the Pennsylvania House’s Labor and Industry Committee that seeks to establish a framework to regulate AI in the workplace. HB 594 would amend the Pennsylvania Human Relations Act to require employers to:
- Notify applicants of the use of AI before any employment interview,
- Obtain applicant consent, and
- Conduct regular bias audits of AI tools.
Although HB 594 has been introduced, it has yet to advance out of committee, leaving Pennsylvania employers without guidance or legislation on how to ethically and effectively implement AI tools in the workplace.
Federal and State Movement: The Bigger Picture
Movement is occurring on the national stage. President Trump recently signed an executive order focused on “removing barriers” for the United States to become a global AI leader. The order called for the development of an AI Action Plan to define priority policy actions, and on February 25, invited public comment from stakeholders by March 15 to help shape a national regulatory framework. Reflecting the Trump Administration’s emphasis on innovation and economic growth, a more relaxed regulatory approach is expected at the federal level. Notably, the U.S. Equal Employment Opportunity Commission (“EEOC”) and the Department of Labor have retracted previous guidance on AI and workplace discrimination, and related materials have been removed from the EEOC’s website.
However, this does not remove an employer’s obligation to comply with existing labor and anti-discrimination laws, along with applicable state and local regulations, when utilizing AI technology. Accordingly, some states are already stepping forward with stricter oversight. For example:
- In Colorado and Illinois,legislation has been enacted to monitor the use of AI in an employment context with the goal of protecting against discrimination.
- New York, Texas, and Virginia have introduced legislation to establish a legal framework for an employer’s use of AI tools in the workplace.
- In California, Senate Bill 7, known as the “No Robo Bosses Act,” would impose strict limits on automated-decision making tools, require major employment decisions to involve a human reviewer, and prohibit certain uses of automated decision systems (“ADS”) in the workplace if adopted.
Ethical Dilemmas and Legal Liability All Employers Could Face
Although there is a strong push to adopt innovative AI tools in the workplace, the ethical dilemmas they present will affect employers across the country, especially as concerns such as AI-related discrimination claims come to the forefront.
Pennsylvania’s neighboring state, New Jersey, offers a key example of proactive governance in this evolving area of the law. In January 2025, the New Jersey Attorney General and the Division on Civil Rights (“DCR”) issued guidance to clarify how the New Jersey Law Against Discrimination (“NJLAD”) applies to “algorithmic discrimination,” which is discrimination resulting from the use of automated tools. Automated tools can be used to assist an employer in business decisions, like deciding who is hired, fired, or receives a promotion. The guidance outlines how discriminatory outcomes can emerge from the way that AI tools are designed, trained, or deployed. Notably, the guidance makes clear that employers can be liable for algorithmic discrimination, even when an employer doesn’t understand the tool and a third party develops the tool.
What This Means for Pennsylvania Employers
Although efforts are in progress to advance AI legislation in surrounding states, the road ahead for employers in Pennsylvania is still uncertain. Pennsylvania’s approach — whether it leans toward comprehensive safeguards or looser oversight — will have profound implications for employers. Until then, Pennsylvania employers are left in the dark to navigate this unregulated area of the law. Accordingly, employers should proceed with caution when implementing automated decision-making tools and AI in the workplace.
Employer Action Items to Mitigate Risk
In this fast-moving landscape where federal law is lacking and Pennsylvania has yet to put a legal framework in place, you can take proactive steps to protect your business and reduce your exposure to liability:
1. Develop Internal AI Policies — Establish clear internal policies governing the use of AI and automated decision-making tools in your business. This includes defining who oversees implementation, how tools are selected, and what safeguards are in place.
2. Understand the Tools you Use — Do your research to understand the design, functionality, and the data used to train the tool.
3. Audit for Bias and Discrimination — Regularly audit AI tools for bias or discrimination, especially when they are used in hiring practices.
4. Stay Informed — What’s legally acceptable today may carry liability tomorrow. Keeping up with proposed legislation, regulatory guidance, and legal trends is essential to keeping your business compliant to avoid liability during this digital gold rush.
