Recently, the Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) unveiled new guidance regarding the use of automated systems and artificial intelligence (collectively referred to as “AI”) in the workplace.  This guidance was issued as a part of a series of actions that the Biden administration has taken to address AI in various contexts and industries. 

The OFCCP guidance follows President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, which directed the Secretary of Labor to “publish guidance for Federal contractors regarding nondiscrimination in hiring involving AI and other technology-based hiring systems.”  Specifically, the guidance addresses how federal prime contractors and subcontractors should approach employment nondiscrimination risks and best practices when using AI in the context of the laws that OFCCP enforces.

EEO Obligations Apply to AI and Automated Systems in Employment Decisions

The new guidance broadly defines “automated systems” and AI in the employment context as software and algorithmic processes that are “used to automate workflows and help people complete tasks or make decisions” such as “hiring, performance evaluation, promotion and termination.”

The obligation of federal contractors to not discriminate against applicants or employees on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or protected veteran status extend to AI processes when used in employment decision-making.  According to the new guidance, at a minimum, to maintain compliance with EEO obligations, federal contractors using AI in employment decisions are required to:  

  • Monitor for any adverse impact on the basis of “race, sex, or ethnicity,” when using AI for employment decisions, and, if any are identified, validate the system using a strategy that complies with applicable OFCCP enforced non-discrimination laws and the Uniform Guidelines on Employee Selection Procedures (“UGESP”).
  • Keep applicant and employee records confidential in accordance with current OFCCP requirements.
  • Provide requested information and cooperate with OFCCP, if asked, regarding any AI systems used in an employment process.
  • Offer reasonable accommodations to applicants or employees with disabilities, as defined in OFCCP’s regulations, unless the federal contractor is able to demonstrate that providing such an accommodation would impose an undue hardship on the operation of its business.

Best Practices for Designing or Choosing an AI System

Should federal contractors desire to use AI in the workplace, they are expected to source and assess the quality of these systems from third-party vendors independently.  This could increase the risk that such systems inadvertently have an adverse impact on protected classes of applicants or employees.  In the new guidance, OFCCP does not offer suggested parameters for AI tools or recommended AI software vendors, nor does it endorse or certify compliance certificates to any such vendors.  Accordingly, contractors should carefully select AI tools and solutions. 

OFCCP provides a number of best practices for federal contractors when designing their own automated system, or when selecting one from a third-party vendor.  OFCCP recommends that federal contractors:

  • Solicit feedback from current employees and human resources professionals where applicable, during the design, deployment, and implementation of an automated system or AI program.
  • Regularly monitor whether the use of the automated system or AI results in an adverse impact before, during, and after implementation, and analyze whether the use of a contractor’s historical data may reproduce biases or further enforce systemic discrimination.
  • Limit full reliance on AI and automated systems for employment decisions and ensure regular human oversight over system outcomes.  Federal contractors should also implement internal governance procedures that establish ongoing monitoring requirements and mitigation plans if needed.
  • Offer comprehensive education and training to employees, with particular focus on those responsible for monitoring the system.

Recommended Best Practices for Using AI in Employment Decision-Making

OFCCP’s new guidance also provides best practices for federal contractors when using AI in employment decision-making.  OFCCP recommends that federal contractors:

  • Provide notice to applicants, employees, and their representatives if the contractor intends to use AI in hiring or other employment decision-making processes, and tailor disclosures to impacted individuals so that they understand the parameters under which they are being evaluated.
  • Inform applicants, employees, and representatives of what information the automated system or AI will capture and how it will be captured, in addition to corrective actions that impacted individuals may take to review, correct, and delete such data, if needed.
  • Offer applicants information on how they may request reasonable accommodations in the hiring process, if necessary.
  • Ensure confidentiality and privacy of all personal information that is received from applicants, employees, and their representatives by sharing how the automated system or AI safeguards such information.

Conclusion

While the use of AI in employment decision-making offers the potential to increase efficiency and automation in employment processes, this recent OFCCP guidance highlights the importance of complying with existing EEO laws when using the technology.  The Covington team continues to monitor and assess best practices for harnessing the strengths of AI developments for our clients, while mitigating any potential adverse impacts and risks. 

Photo of Scott A. Freling Scott A. Freling

Scott Freling represents civilian and defense contractors, at all stages of the procurement process, in their dealings with federal, state, and local government customers and with other contractors. He has a broad-based government contracts practice, which includes compliance counseling, internal investigations, strategic procurement…

Scott Freling represents civilian and defense contractors, at all stages of the procurement process, in their dealings with federal, state, and local government customers and with other contractors. He has a broad-based government contracts practice, which includes compliance counseling, internal investigations, strategic procurement advice, claims and other disputes, teaming and subcontracting, and mergers and acquisitions. He represents clients in federal and state court litigation and administrative proceedings, including bid protests before the Government Accountability Office and the U.S. Court of Federal Claims. He also represents clients in obtaining and maintaining SAFETY Act liability protection for anti-terrorism technologies. Mr. Freling’s experience covers a wide variety of industries, including defense and aerospace, information technology and software, government services, life sciences, renewable energy, and private equity investment in government contractors.

Photo of Lindsay Burke Lindsay Burke

Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising…

Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising under federal and state laws, and she frequently partners with white collar colleagues to conduct internal investigations of executive misconduct and workplace culture assessments in the wake of the #MeToo movement. Recently, Lindsay has provided critical advice and guidance to employers grappling with COVID-19-related employment issues.

Lindsay guides employers through the process of hiring and terminating employees and managing their performance, including the drafting and review of employment agreements, restrictive covenant agreements, separation agreements, performance plans, and key employee policies and handbooks. She provides practical advice against the backdrop of the web of state and federal employment laws, such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, the Fair Labor Standards Act, and the False Claims Act, with the objective of minimizing the risk of employee litigation. When litigation looms, Lindsay relies on her experience as an employment litigator to offer employers strategic advice and assistance in responding to demand letters and agency charges.

Lindsay works frequently with the firm’s privacy, employee benefits and executive compensation, corporate, government contracts, and cybersecurity practice groups to ensure that all potential employment issues are addressed in matters handled by these groups. She also regularly provides U.S. employment law training, support, and assistance to start-ups, non-profits, and foreign parent companies opening affiliates in the U.S.

Photo of Nooree Lee Nooree Lee

Nooree is a Partner in Covington’s Government Contracts practice.  He represents government contractors in all aspects of the procurement process and focuses his practice on the regulatory aspects of M&A activity as well as foreign military sales and other international contracting matters.

Photo of Michelle Barineau Michelle Barineau

Michelle Barineau counsels clients on a broad range of labor and employment issues. She helps clients navigate matters involving discrimination, harassment, family and medical leave, wage and hour compliance, non-competition, trade secrets, and other issues arising under state and federal employment laws. She…

Michelle Barineau counsels clients on a broad range of labor and employment issues. She helps clients navigate matters involving discrimination, harassment, family and medical leave, wage and hour compliance, non-competition, trade secrets, and other issues arising under state and federal employment laws. She routinely provides guidance pertaining to employee handbooks, employment agreements, and workplace policies. Michelle also has experience investigating employment complaints and she frequently partners with white collar colleagues to conduct internal workplace culture assessments and audits in the wake of the #MeToo movement.

Photo of Jasmine Wang Jasmine Wang

Jasmine Wang is an associate in the firm’s Washington, DC office. She is a member of the Government Contracts and Employment Practice Groups and maintains an active pro bono practice.