EU Proposal Could Limit AI Use in Recruiting and Hiring

By Catherine Skrzypinski June 4, 2021
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​The European Union (EU) proposed in April to regulate the use of artificial intelligence, which could alter how companies recruit and hire workers for jobs across Europe.

Drafting the first legal framework on AI, the EU has determined that AI systems in hiring and recruiting are high risk, noted Amy Bird, an attorney with Clifford Chance in London.

The EU's proposal may impact recruitment and selection systems, such as advertising for job vacancies, screening or filtering applications, and evaluating candidates with interviews and tests.

"There are ethical implications of AI having an increasingly greater impact on individuals' lives," Bird said. "The EU proposal recognizes that human intelligence cannot give way entirely to artificial intelligence, and that there are boundaries into which it should not stray."

EU officials stated that AI technology needs proactive regulation now, as it may become difficult to regulate AI later due to the rapid advances in the technology, said Jan-Ove Becker, an attorney with Littler in Hamburg, Germany.   

"The regulation must find a balance between reasonable commercial and operational interests of companies, and privacy and anti-discrimination rights of employees," Becker said.

AI systems providers would need to supply detailed documentation about how their systems work to ensure they comply with the proposed rules, explained Julia Reinhardt, a fellow-in-residence with the Mozilla Foundation in San Francisco.

European companies that break those rules could face penalties and fines of up to 30 million euros (approximately US$36 million) or even higher for large global organizations, according to Sanne Blankestijn, an attorney with Clifford Chance in Amsterdam. "This will ensure that management will take compliance with these proposed rules seriously."

The proposal could take several years to become law, because all 27 EU countries and the European Parliament need to approve it, Blankestijn added.

The EU proposal could dampen innovation in the European workplace by creating unnecessary roadblocks to developing, testing and using AI, said Hodan Omaar, a policy analyst with the Center for Data Innovation, a think tank in Washington, D.C.

"The regulations will make it more expensive and time-consuming for companies to introduce new AI applications," Omaar said.

An Ethical Approach to AI

If the EU proposal passes, it will create a more standardized, ethical and transparent approach to using AI in the recruitment and hiring process, noted Eric Sydell, executive vice president of innovation at software company Modern Hire.

"Companies and hiring technology providers will be required to follow a standard set of rules, which will improve the candidate experience," Sydell added.

While AI technology raises ethical questions, the EU must also recognize that strict rules may impose significant administrative, legal and financial burdens on EU employers, explained Michael Chichester Jr., an attorney with Littler in Detroit. Employers may want to enlist the help of legal counsel to develop an AI policy, along with training programs.

"A decent AI policy will outline the company's stance on AI ethics, with the goal of reducing prejudice, ensuring justice, and balancing surveillance and accuracy," Chichester added.

AI's Impact on North America

North American regulators are also aware of the potential benefits and risks of more AI in the workplace, Chichester said.

"As AI continues to be developed and deployed, [Littler] anticipates that governments will become more active in policing its use in hiring and recruiting," Chichester added. "The EU proposal will be carefully studied by U.S. regulators and could impact the direction of regulation outside of the EU."

The Federal Trade Commission announced in April that it is monitoring what types of AI systems international companies are using, Reinhardt stated.

How HR Can Embrace AI

While many global employers are already tapping into AI to evaluate and screen potential candidates, HR departments in Europe must ensure that the AI software meets EU requirements if the proposal passes, Blankestijn stated. 

"Hopefully, elements of HR's role should become easier and less time-consuming with AI," she added. That said—HR professionals "will need to become increasingly fluent with the technical and governance considerations with AI so they can effectively harness the new opportunities for their organizations and navigate the risks."

AI could help HR professionals find better matches for jobs in their organizations, but if unchecked, AI also has the potential to perpetuate historical biases, Becker said. Because the data used to train AI systems are based on human decisions, the resulting algorithms could encourage discriminatory choices. For example, an AI tool trained on data in which human recruiters avoided hiring graduates from women's colleges for certain roles will perpetuate that same bias in a machine-learning algorithm.

"In embracing this new technology and adapting to the new requirements of their roles, HR professionals will need to become educated consumers to understand both the potential and limits of AI-powered tools," Becker said. "However, HR will always remain a human-centric field where skilled professional background, gained experience and empathy will not be replaced by technology."      

Catherine Skrzypinski is a freelance writer based in Vancouver, British Columbia, Canada.

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