Using AI in the Workplace: What Indiana Employers Should Know

Artificial intelligence is changing how businesses operate, but new regulations are placing limits on how employers can use these tools. Here is what Indiana business owners need to understand about AI in the workplace.

Artificial intelligence has rapidly moved from a novelty to a core part of how many businesses operate. From automating customer service inquiries to screening job applicants and analyzing employee performance data, AI tools are being adopted across industries at a remarkable pace. However, as AI becomes more integrated into the workplace, state and federal regulators are stepping in with new rules that employers need to follow.

Several states have enacted or are considering laws that restrict how employers may use AI in employment-related decisions. For instance, some states now require employers to notify applicants and employees when AI is being used in hiring, promotion, or termination decisions. Other states have gone further by prohibiting the use of AI tools that produce discriminatory outcomes in employment, even if the discrimination is unintentional. Indiana business owners who operate in multiple states or who recruit from out-of-state talent pools should be particularly mindful of these evolving requirements.

At the federal level, the Equal Employment Opportunity Commission has signaled that existing anti-discrimination laws apply to AI-driven employment decisions. If an AI tool used in hiring disproportionately screens out applicants on the basis of race, sex, age, disability, or another protected characteristic, the employer may be held liable under Title VII of the Civil Rights Act or the Americans with Disabilities Act, regardless of whether the employer intended to discriminate. This means employers cannot simply rely on a vendor’s assurance that an AI tool is unbiased.

Indiana employers should take a proactive approach to managing AI risk. This includes conducting regular audits of any AI tools used in employment decisions, maintaining transparency with applicants and employees about how AI is being used, and working with legal counsel to develop written policies governing AI use in the workplace. Employers should also carefully review vendor contracts to understand what data is being collected, how it is stored, and whether the vendor assumes any liability for discriminatory outcomes.

The attorneys at McNeely Law stay up to date on the rapidly changing legal landscape surrounding AI and employment law. If you are an Indiana employer using or considering AI tools in your business operations, contact McNeely Law to discuss how to implement these technologies in a way that is both effective and legally compliant.

This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.