Articles by Our Attorneys

Artificial Intelligence in the Workplace: Three Areas Employers Should Be Watching

Artificial intelligence is no longer a futuristic concept confined to Silicon Valley. Today, employers of all sizes are deploying AI-powered tools to recruit talent, evaluate employee performance, manage productivity, and streamline human resources functions. These technologies offer significant efficiencies, but they also introduce new legal risks that employers cannot afford to ignore.

While AI has the potential to improve workplace decision-making, it does not alter an employer’s legal obligations under federal, state, and local employment laws. In fact, regulators and courts are increasingly emphasizing that employers remain accountable for decisions made with the assistance of AI. As adoption accelerates, three areas are likely to dominate employment law over the next several years.

1. AI in Hiring: Increased Scrutiny of Employment Decisions

Hiring is perhaps the area where AI has gained the greatest traction. Employers increasingly rely on software to screen resumes, rank applicants, analyze interview responses, and predict candidate success. Properly implemented, these tools can improve consistency and reduce administrative burdens. However, they also present significant legal challenges.

An AI system is only as reliable as the data on which it is trained. If historical hiring decisions reflect unconscious bias or fail to account for protected characteristics, an AI model may inadvertently replicate those patterns. Even absent discriminatory intent, employers may face disparate impact claims if an AI-assisted hiring process disproportionately excludes applicants based on race, sex, age, disability, or another protected characteristic.

Employers should remember that delegating hiring decisions to a software vendor does not transfer legal responsibility. If an employer relies on an AI recommendation in making an employment decision, that employer will likely remain responsible for ensuring the decision complies with applicable anti-discrimination laws.

To reduce risk, employers should conduct due diligence before implementing AI hiring tools. That includes understanding how a system evaluates candidates, requesting documentation regarding bias testing and validation, periodically auditing outcomes for disparate impacts, and maintaining meaningful human oversight throughout the hiring process. AI should inform employment decisions – not replace independent judgment.

2. AI-Powered Employee Monitoring and Performance Management

Artificial intelligence is also transforming how employers evaluate employee performance. Modern workplace technologies can analyze productivity metrics, review electronic communications, summarize meetings, monitor computer usage, and identify performance trends

in real time. These capabilities can provide valuable management insights, but they also create new legal considerations.

Employers have long monitored workplace activity, but AI enables monitoring at a scale and level of sophistication previously unavailable. The more expansive the monitoring, the greater the likelihood of challenges involving employee privacy, retaliation, disability accommodations, and protected workplace activity.

For example, an AI system that automatically flags employees for low productivity may fail to account for approved medical accommodations, protected leave, or other legitimate explanations for reduced output. Similarly, automated disciplinary recommendations may overlook important context that a human supervisor would recognize immediately.

From a litigation perspective, employers should be particularly cautious about allowing AI-generated performance scores or disciplinary recommendations to become the sole basis for adverse employment actions. Plaintiffs will undoubtedly argue that employers abdicated their responsibility by blindly following algorithmic recommendations without conducting an individualized assessment.

Best practices include maintaining transparency regarding monitoring practices where appropriate, establishing clear internal policies governing AI use, documenting management’s independent review of AI-generated information, and ensuring supervisors understand that AI is a decision-support tool – not the final decision-maker.

3. Wage and Hour Compliance in an AI-Driven Workplace

Artificial intelligence is also changing how employers manage scheduling, timekeeping, and workforce allocation. AI systems can optimize employee schedules, forecast staffing needs, monitor productivity, approve overtime, and identify attendance patterns with remarkable efficiency. These same systems, however, can generate significant wage and hour exposure if not carefully managed.

For example, productivity-monitoring software may reveal that employees routinely perform work before clocking in, continue responding to emails after scheduled hours, or work through unpaid meal periods. While AI can help identify these issues, it also creates detailed electronic records that may later become evidence in wage and hour litigation if employers fail to address them.

Likewise, automated scheduling systems should be monitored to ensure they comply with applicable federal, state, and local laws regarding overtime, meal and rest periods, predictive scheduling requirements, and employee classification.

Employers should view AI as a compliance tool rather than merely an operational tool. Regular audits of AI-generated workforce data may help identify wage and hour risks before they develop into costly class or collective actions. HR, payroll, legal, and operations personnel should work collaboratively to ensure that AI-generated recommendations remain consistent with applicable employment laws and company policies.

Looking Ahead

Artificial intelligence will undoubtedly become a permanent feature of the modern workplace. Employers that embrace these technologies thoughtfully stand to benefit from increased efficiency, improved consistency, and more informed decision-making. Those benefits, however, come with corresponding legal responsibilities.

The most successful organizations will not be those that simply adopt AI the fastest, but those that implement it responsibly. That means conducting careful vendor due diligence, regularly auditing AI systems for legal compliance, maintaining robust human oversight, and documenting employment decisions independent of algorithmic recommendations.

Employment law has always adapted to new workplace technologies. Artificial intelligence represents the next evolution. Employers that proactively establish sound governance today will be better positioned to minimize litigation risk while realizing the substantial benefits AI has to offer.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels businesses on commercial contract matters.  

The June 2026 employment law update provides guidance on best practices for managing remote employees. Remote work has become a permanent part of the modern workplace, offering employers greater flexibility and access to talented professionals regardless of geographic location. However, managing remote employees presents unique legal and operational challenges that require thoughtful planning. Employers should develop comprehensive policies and practices that promote accountability while reducing the risk of employment-related claims. 

Establish Clear Remote Work Expectations 

The foundation of remote work management is a well-written remote work policy. This policy can define work schedules, availability expectations, communication protocols, performance standards, and procedures for requesting leave or reporting workplace issues. Employees should understand when they are expected to be available, how they should document their work time, and which communication platforms they are expected to use. Establishing these expectations upfront minimizes misunderstandings, promotes consistency across the organization, and provides managers with objective standards for evaluating performance. 

Stay Compliant with Wage and Hour Laws 

Employers must remain vigilant about compliance with wage and hour laws. The fact that an employee works from home does not change an employer’s obligations under federal and state labor laws. Nonexempt employees should accurately record all hours worked, including time spent responding to emails or completing tasks outside of their scheduled shifts. Managers should be trained to avoid encouraging off-the-clock work and should promptly address unauthorized overtime while ensuring employees are compensated for all hours actually worked. Regular audits of timekeeping practices and manager training can help minimize costly wage and hour disputes. 

Respond Thoughtfully to Accommodation Requests 

Another issue that has become increasingly common is employee requests for remote work as a reasonable accommodation for a medical condition or disability. Employers should avoid treating these requests as automatic approvals or automatic denials. Instead, they should engage in the interactive process required by applicable disability discrimination laws to determine whether remote work – or another accommodation – would enable the employee to perform the essential functions of the position without creating an undue hardship. 

This analysis should be individualized and based on the employee’s specific limitations, the essential duties of the position, and the employer’s operational needs. Employers should also recognize that if a position has been successfully performed remotely for an extended period, it may be more difficult to argue that regular on-site attendance is an essential job function. Carefully documenting the interactive process and the rationale for accommodation decisions can significantly reduce legal risk if those decisions are later challenged. 

Protect Confidential Information and Company Data 

Protecting confidential business information is another significant concern in remote work environments. Employers should implement cybersecurity measures such as multi-factor authentication, secure virtual private networks, encrypted devices, and strong password requirements. Regular cybersecurity training can help employees recognize phishing attempts, avoid unsafe internet practices, and properly safeguard sensitive client and company information. Written policies should also address the appropriate use of personal devices, home printing, document retention, and the secure disposal of confidential materials. 

Evaluate Performance Based on Results 

Performance management often requires a different approach when employees are working remotely. Rather than evaluating employees based on their online presence or immediate responsiveness, employers should establish objective performance metrics tied to job responsibilities and measurable outcomes. Regular check-ins, documented feedback, and consistent performance evaluations help employees stay engaged while reducing the likelihood of claims involving inconsistent treatment or discrimination. 

Understand Multi-State Employment Obligations 

One of the most overlooked challenges of managing a remote workforce is compliance with the employment laws of multiple jurisdictions. In many cases, the laws of the state or locality where the employee lives and performs the work – not where the employer’s headquarters is located – will govern key aspects of the employment relationship. As a result, employers with remote employees in different states may be subject to a patchwork of wage and hour laws, paid leave requirements, meal and rest break rules, final paycheck obligations, expense reimbursement statutes, and other state-specific employment regulations. 

Employers should periodically review their policies, payroll practices, and remote work arrangements to ensure compliance with the laws applicable in each jurisdiction where employees work. Conducting regular legal audits can help identify compliance gaps before they result in costly litigation or government investigations. 

The Bottom Line 

Remote work offers significant benefits for both employers and employees, but it also requires careful attention to evolving legal obligations. By implementing clear policies, maintaining compliant wage and hour practices, thoughtfully addressing accommodation requests, safeguarding confidential information, managing performance consistently, and understanding multi-state employment laws, employers can reduce legal risk while fostering a productive, engaged, and successful remote workforce. 

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels businesses on commercial contract matters.