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As the landscape of education evolves, colleges are increasingly looking to artificial intelligence (AI) to enhance learning and streamline operations. While the potential benefits of AI are significant, administrators must navigate a range of legal and ethical challenges to ensure that these technologies serve all students effectively and equitably.

Equity and Access: The Digital Divide

One of the foremost concerns surrounding the integration of AI in higher education is equity. Many students, particularly those with fewer resources, may lack access to the necessary technology or reliable internet. Implementing AI tools without addressing these disparities risks deepening the existing educational divide. As student-centered administrators, it is crucial to prioritize strategies that ensure all students can engage with AI-enhanced learning environments. This may involve partnerships with external organizations to provide devices and internet access.

Data Privacy and Ethical Considerations

The use of AI may require extensive data collection on student performance and behavior. This raises significant concerns regarding data privacy. Administrators must navigate the complexities of federal laws like FERPA (Family Educational Rights and Privacy Act) and state regulations, ensuring we all safeguard student information. Transparency is key; districts should inform students about what data it collects and how it uses the data. By developing clear privacy practices and adhering to ethical guidelines, districts can foster trust with their students while complying with legal obligations. It is also critical to ensure that your contracts with vendors, software, and other technology tools is protecting student data, and follow state and federal privacy laws.

Job Displacement and Workforce Dynamics

AI’s potential to automate administrative tasks and even aspects of teaching raises concerns about job displacement within colleges. Faculty and staff may resist the adoption of AI technologies due to fears of losing their positions. It is essential to engage in open dialogue with employees and employee representative groups, highlighting how AI can serve as a tool to enhance rather than replace human roles. By focusing on the collaborative potential of AI—such as using it to free up time for faculty to engage in more meaningful interactions with students—colleges can foster a more positive perception of these technologies.

Maintaining Educational Quality

While AI can offer personalized learning experiences, there is a risk that over-reliance on technology might lead to a diluted educational experience. Colleges and districts must ensure that AI systems align with their mission and the diverse needs of their students. This requires careful evaluation of AI tools and their effectiveness in promoting academic success. Administrators should involve faculty in the decision-making process, ensuring that any AI implementation enhances, rather than detracts from, the quality of education.

Training and Resource Allocation

Successful AI integration requires that faculty and staff receive adequate training and support. This can be a resource-intensive process, but it is essential for the effective and safe use of technology. Administrators should allocate budgetary resources not only for AI tools but also for professional development programs to encourage faculty and staff to implement those tools. By equipping educators and staff with the necessary skills, districts can maximize the benefits of AI while minimizing resistance to its adoption.

Conclusion: A Balanced Approach

The integration of AI into the educational environment presents both exciting opportunities and formidable challenges. The key to successful implementation lies in a balanced approach that prioritizes equity, safeguards data privacy, fosters job security, maintains educational quality, and invests in training. By addressing these concerns proactively, your colleges can harness the power of AI to create a more inclusive, efficient, and enriching educational experience for all students.

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As community colleges increasingly embrace technology, artificial intelligence (AI) has emerged as a powerful tool for academic search committees. However, as we integrate it, we must carefully assess District use to ensure fairness, privacy considerations, transparency, and legal compliance, among other issues. Below are tips for administrators on the “dos” and “don’ts” of using AI in this essential process.

Dos

1. Do Set Clear Objectives:

Before implementing AI tools, define your objectives clearly. Determine what you hope to achieve by using the tool and in what part of the process you will use it. Having specific goals will help you select the appropriate AI applications.

2. Do Train Committee Members:

Ensure that you have provided all members of the search committee with adequate training on the AI tools you’re using. Understanding how these tools operate, including their limitations, is crucial for interpreting results accurately and making informed decisions.

3. Do Leverage AI to Help Guide Assessment of Candidate Sensitivity to Diverse Student Backgrounds:

Education Code Section 87360, requires candidates demonstrate a “sensitivity to and understanding of the diverse academic, socioeconomic, cultural, disability, and ethnic backgrounds of community college students.” This requirement applies to academic and administrative positions. We strongly recommend including the requirement for classified hiring as well.

AI tools can help develop questions, demonstration prompts, supplemental questions, model answers, and the like. AI should supplement, not replace, human judgment, allowing hiring committees to make informed decisions that reflect institutional values and the needs of a diverse student population.

4. Do Prioritize Transparency:

Be clear and open about how your district is using AI throughout the hiring process. Communicate clearly with candidates about the role AI plays in the search. This builds trust and mitigates concerns about bias.

5. Do Monitor for Bias:

Regularly assess the AI systems for potential biases in decision-making. Analyze outcomes to identify patterns that may favor or disadvantage specific groups. Addressing bias proactively can help ensure a fair hiring process and compliance with anti-discrimination laws.

6. Do Incorporate Human Oversight and Control:

While AI can enhance efficiency, it cannot replace human judgment in the process. Human must validate and check the data. Ensure that human evaluators have the final say in candidate progression and selection. Combining AI insights with human expertise can lead to more nuanced and informed decisions.

7. Do Stay Updated on Legal Considerations:

Stay up to date on relevant laws and regulations regarding employment practices and data privacy. Ensure that your use of AI complies with federal and state laws, especially those pertaining to equal employment opportunities. Search committees should consult with HR and IT before utilizing any AI tool or application.

Don’ts

1. Don’t Rely Solely or Primarily on AI:

Human recruiters are essential in providing human touch and building personal connections. Avoid the temptation to allow AI to dominate the hiring process. While AI can sift through large volumes of applications, human context and judgment are essential in evaluating candidates holistically. AI is also prone to hallucinations, making human contribution, oversight, and review essential.

2. Don’t Ignore Data Privacy or IT Direction:

Be cautious about the data you input into AI systems. Work closely with your District’s IT department to ensure approval to use specific AI applications or tools. Protect candidates’ privacy and ensure that any data collected complies with applicable privacy laws. Do not input sensitive information into AI tools and ensure secure handling of all data.

3. Don’t Use Outdated Algorithms and Processes:

Things are moving fast with AI! The effectiveness of AI tools can diminish over time, as algorithms or processes become outdated. Regularly review and update the AI systems you employ to ensure you are obtaining the desired results and that your processes reflect current best practices.

4. Don’t Overlook Candidate Experience:

Be mindful of how the use of AI may affect the candidate experience. Automated processes can feel impersonal; ensure there are adequate opportunities for candidates to engage with the search committee.

5. Don’t Dismiss Candidate Fit:

AI tools may prioritize specific qualifications, but don’t overlook the importance of institutional fit and soft skills. Consider how candidates align with your District’s values and mission, which AI cannot fully capture.

6. Don’t Neglect Feedback Mechanisms:

Implement mechanisms for feedback on the AI tools used in the hiring process. Encourage search committee members and candidates to share their experiences, which can help refine the AI’s application in future searches.

Conclusion

Integrating AI into search committees in a community college can enhance the efficiency and effectiveness of the hiring process. Following these dos and don’ts, administrators can harness the benefits of AI while promoting impartiality, transparency, and legal compliance. Balancing technology with human oversight can lead to better hiring outcomes and a more inclusive academic environment.

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Engaging with an Artificial Intelligence (“AI”) service provider entails navigating a complex legal landscape. To develop a successful partnership, your organization must carefully address key legal considerations before signing a contract. This article outlines essential best practices for contracting with AI service providers.

  1. Conduct Due Diligence

AI companies and their services are relatively new in the business world. Your organization must conduct comprehensive due diligence on the AI service provider. Review the company’s status on the California Secretary of State website to confirm good standing, examine publicly available reviews, request references from other customers, and evaluate how long the company has been in business and how long the product has been operational. Investigate the company’s financial health to understand its overall stability and reliability. By assessing these factors, your organization can avoid partnering with an unstable or unreliable provider.

  1. Understand Data Protection and Ownership

Your organization needs to identify the types of data it will share with the AI provider to provide the offered services. After determining what data will be shared, assess the legal restrictions or protections associated with that data. For example, consider whether the data includes employee information, pupil records, or non-public business information. If your organization shares any confidential information, the contract must clearly define each party’s responsibilities for complying with applicable laws. Additionally, the contract should specify who holds legal responsibility for a breach of confidential information.

The contract should also explicitly state who holds ownership of the data (both input and output). Typically, your organization should retain ownership of its data. However, AI providers may request rights to aggregated anonymized data or data in a form that they can use for their own purposes. Scrutinize these provisions carefully to ensure the AI service provider does not use the data in ways that violate privacy laws or your organization’s policies.

  1. Establish Liability Obligations

Require the AI provider to assume liability in the event of a data breach. Specify their obligations under data breach laws and notification requirements to ensure clear accountability for immediate actions following a breach of confidential information. The contract should clearly state the consequences of any breach of the data obligations or contract violations. Include indemnification provisions that hold the AI provider accountable for any third party claims arising from their AI services. These provisions will help your organization mitigate potential fiscal risks in the event issues occur with the services.

  1. Anticipate Termination of the Contract

Draft a strong termination provision to give your organization significant leverage throughout the contract term. Ensure the clause allows for termination if the AI provider’s services fall short of expectations, fail to meet your needs, or do not comply with the contract requirements. Protect your organization in the event the AI provider abruptly cancels by requiring notice and reimbursement requirements.

Clearly define how the AI provider must handle data at the conclusion of the relationship. Specify the return or destruction of data and establish timelines for completing these actions.

Contracting with an AI service provider requires careful attention to multiple factors. By conducting due diligence, understanding data protection and ownership rights, establishing liability obligations, and anticipating contract termination, your organization can set itself up for a successful partnership. Although this list is not exhaustive, it highlights critical considerations for evaluating AI service contracts. Engaging legal counsel to review the agreement will further reduce risks and ensure the contract is tailored to the specific needs of your organization.

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OpenAI’s launch of ChatGPT nearly two years ago kicked off the rapid integration of artificial intelligence into society’s daily activities. Today, established tech giants and upcoming startups alike are seemingly adding some level of AI to every product. This developing landscape provides employers with possibilities of both increased efficiency and increased liability.

While the technology is new, the potential harms are familiar. In a lawsuit developing in the Northern District Court of California, Mobley v. Workday, Inc., a plaintiff is suing the HR-provider Workday alleging that its algorithmic decision-making tools screened employment applications in a discriminatory manner. The litigation has focused on whether the plaintiff could bring such a lawsuit in the first place. In this regard, the court recently reasoned, “Workday’s role in the hiring process is no less significant because it allegedly happens through artificial intelligence rather than a live human being who is sitting in an office going through resumes manually to decide which to reject. Nothing in the language of the federal anti-discrimination statutes or the case law interpreting those statutes distinguishes between delegating functions to an automated agent versus a live human one.” At least for this judge, employers must ensure that their AI tools comply with existing employment laws.

The EEOC’s Guidance on AI and Hiring

Absent new laws specifically addressing AI use, regulators aim to address potential AI risks under existing legal frameworks. The Equal Employment Opportunity Commission (“EEOC”) published guidance earlier this year focusing on actions employers may take to monitor their AI tools. The EEOC has taken the position that employers are responsible under Title VII for their use of AI tools even if another entity designed or administered them. The EEOC also noted that employers may be held responsible for the actions of their agents, such as software vendors.

The EEOC specifically focused on employers’ obligations to prevent “disparate impact” or “adverse impact” absent a business necessity. A disparate impact occurs when a selection procedure has the effect of disproportionately screening out a protected classification. As an example, if an existing workforce has a large number of male supervisors, AI software may inappropriately correlate being male with success and favor males for hire and promotion.

As a rule of thumb, the EEOC uses the “four-fifths rule” to determine disproportionate impact. The selection rate of one group is substantially different from the selection rate of another group if their ratio is less than four-fifths, or 80%. For example, if a selection procedure results in hiring 80 applicants, 30% of whom are Black while 60% are White, the procedure may have a disparate impact on Black applicants. This is because the proportion between the selection rates (30/60 = 1/2) is 50%, which is less than 80%.

Analyzing the potential adverse impact of an AI tool is an easy step since it focuses on the output data of the tool, rather than attempting to determine the technical parameters of an algorithm. However, adverse impact is only one form of discrimination, and the “four-fifths” rule is only a general rule of thumb. Employers should still attempt to form other guardrails over AI use.

Indeed, the EEOC’s recent Title VII guidance supplements a 2022 guidance on potential risks of violating the ADA using AI tools. In that guidance, the EEOC noted areas of concern such as failing to provide a reasonable accommodation to applicants that cannot be fairly rated by automated application procedures or that perhaps reveal a medical restriction.

California’s Proposed Regulations

Late last year, Governor Gavin Newsom signed Executive Order N-12-23. The Executive Order instructed several California agencies to analyze and report on potential risks of AI on governmental functions. It also directed the agencies to establish guidelines ensuring responsible development of AI systems and to prepare the government for AI use.

Significantly, there may be new AI-focused state regulations on the horizon. On May 17, 2024, the Civil Rights Department’s Civil Rights Council (“Council”) noticed its Proposed Regulations to Protect Against Employment Discrimination in Automated Decision-Making Systems. The initial public comment period for the proposed regulations closed on July 18, 2024.

On October 17, 2024, the Council noticed its first modification of the proposed regulations. The comment period for the proposed modifications closes on November 18, 2024. Significantly, the Council is taking the position that an “agent” that utilizes an automated decision-making tool, directly or indirectly, on behalf of an employer to facilitate decision-making traditionally exercised by an employer is also an “employer.” The Council may be relying on the California Supreme Court’s recent holding in Raines v. U.S. Healthworks Medical Group (2023) 15 Cal.5th 268 for this position.  Raines concluded that an employer’s business entity agents could be directly liable under the Fair Employment and Housing Act (“FEHA”) when they carry out FEHA-regulated activities on behalf of an employer.

The regulations also broadly define automated decision systems to mean a “computational process that makes a decision or facilitates human decision making.” The Council initially tried to carve out basic tools like calculators or excel spreadsheets, but the amended regulations appear to reverse course if those tools facilitate human decision-making. Thus, employers need to have some level of confidence that any calculation or formula used to make employment-related decisions does not create a disparate impact. The proposed regulations note that proof of anti-bias testing or similar proactive efforts to avoid algorithmic discrimination may be relevant evidence to a claim of employment discrimination. However, it recently deleted a previously articulated business necessity defense—leaving it to the courts to determine the appropriate nature and scope of what that defense will look like (if at all).

The Council maintains that the proposed regulations do not impose any new requirements. Instead, it asserts that they are only clarifying how existing regulations apply to AI tools. Both employers and software vendors are likely to test that assertion in court.

The October 17, 2024 modifications reflect that the Council is receptive to some concerns. Particularly, the original proposals would have defined “medical or psychological examinations” to include “personality-based” questions, which include questions that measure optimism/positive attitudes, personal/emotional stability, extroversion/introversion, and “intensity.” The original proposed regulations did not limit the definition to AI-use, nor clearly limit the scope of “personality-based” questions. Thus, an employer could potentially violate the law by asking any pre-offer interview questions that attempt to determine a candidate’s personality in any way. In the modified draft regulations, the Council more plainly defined medical or psychological examinations to “include a test, question, puzzle, game, or other challenge that leads to the identification of a disability.”

AI at Work

Beyond management’s use of AI tools, employers should also be aware of their employee’s use of AI tools for work. More than likely, at least several of any workplace’s employees have used AI tools. As a result of the increasing AI integration into existing products, employees may have even used AI without realizing it. For example, Google searches result in an “AI Overview” which summarizes several webpages into one result.

In the context of employee use of AI tools, the general risks in using AI apply. One primary concern is accuracy. AI systems may “hallucinate” false information. Even Google’s AI Overview is prone to make mistakes. Employers should instruct employees to not rely on AI summaries, and instead confirm the information by visiting the sources of information.

Also, agencies often interact with sensitive information from members of the public. For example, employees could use AI tools to draft incident reports or personnel documents. Employers should contemplate specifically whether to allow such use, and if so, employees should receive guidance on how to safely use AI without jeopardizing information security.

Further, agencies must be ever mindful of their obligations under the Public Records Act. A member of the public may argue that “communications” between employees and AI tools are public records, which must be disclosed.

Evolving Scene

Unquestionably, the impact of AI on the employment landscape will continue to develop quickly. It is unclear when or if the Council’s regulations will be implemented, or whether the state legislature (which is actively working on AI-related statutes) will beat them to the punch. What is certain, however, is that employers have an opportunity now to take a hard look at the formulas and software being used to assist with their employment decisions, directly or indirectly through a vendor. Employers should actively question whether anti-bias testing or other proactive methods have been implemented and can be cited as a potential defense, as well as the possibility of indemnity provisions in contracts with software or recruitment vendors.

AI will transform our world in the coming years, and its adoption and utilization will become ubiquitous. Employers must be mindful, however, of the risks associated with AI and ensure they are considering the ways it can be a double-edged sword. LCW continues to monitor these issues with specific attention to how AI will affect California’s public employers.

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On October 24, 2024, the U.S Department of Education (“DOE”) released its AI Toolkit for Safe, Ethical, and Equitable AI Integration for school leaders. This toolkit, primarily targeted towards K-12 school leaders, implements recommendations from the DOE’s Artificial Intelligence (“AI”) Future of Teaching and Learning report (published May 2023). It provides guidance for the effective use and integration of AI in teaching and learning, summarizes key federal laws and considerations for ensuring safe, secure, and non-discriminatory AI use, and promotes the principles of transparency and awareness for schools using AI. The toolkit covers ten key topic areas, or “modules”:  1) opportunities and risks; 2) privacy and data security; 3) civil rights; 4) accessibility, and digital equity; 5) understanding evidence of impact; 6) considering the instructional core; 7) planning an AI strategy; 8) establishing a task force to guide and support AI efforts; 9) building AI literacy for educators; and 10) updating AI policies and advocating for responsible use; and developing an organization-wide AI action plan.

The DOE was required to develop this toolkit pursuant to President Biden’s October 30, 2023, Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence (“Executive Order”). This Executive Order was issued to promote the thoughtful responsible development of AI with appropriate guardrails by developing of federal standards for artificial intelligence (“AI”) use within public institutions and in connection with federal programs. California Department of Education’s previously released a resource entitled “Learning With AI, Learning About AI” https://www.cde.ca.gov/ci/pl/documents/cdeairesourcekit.pdf in September 2023, providing policy suggestions and guidance for the use of AI in the classroom and the safe use of the technology.

Liebert Cassidy Whitmore attorneys are closely monitoring guidance from the DOE and will provide updates to assist our clients with compliance. We are available to assist our clients in developing policies to promote responsible and ethical use of AI.

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Though technological innovation is always happening, in the past year there has been an almost inescapable reference to a decades-old science fiction term: AI, or Artificial Intelligence.  Seen as a watershed moment of research and development in the past, AI is now a buzzword for content creation, software features, and product design.  Whether you are on the internet or watching TV, AI seems to be everywhere.  But some employers don’t realize that AI is making its way into the workplace, whether it is wanted or not.   This means that regulation of this budding technology is inevitable.

On April 29, 2024, the Department of Labor’s Wage and Hour Division joined the fray to provide its analysis on emerging issues, publishing a Field Assistance Bulletin (“Bulletin”) concerning “Artificial Intelligence and Automated Systems in the Workplace under the Fair Labor Standards Act and Other Federal Labor Standards.” The bulletin discusses how AI can affect the workplace in relation to several federal laws, but dives a bit deeper into how it might interact with the Fair Labor Standards Act (“FLSA”).  Specifically how it relates to these two FLSA issues: “Hours Worked” and “Calculating Wages Owed under the FLSA”, and we think both deserve a little more perspective. 

Hours Worked and AI’s Impact on Employee Tracking – The DOL Bulletin

    The Bulletin provides an overview of how all “hours worked” must be paid under the FLSA, grouping its discussion into AI’s impact on tracking work time, monitoring break time, waiting time, and employee travel.  Each discussion point focuses on how AI now makes it easier and more tempting than ever, for employers to track an employee’s work performance. 

    The FLSA mandates employers pay covered employees at least the federal minimum wage for every hour worked, as well as overtime pay of one and one-half their regular rate of pay for each hour worked in excess of 40 hours in a workweek.  See 29 U.S.C. §§ 206-207.  In all cases, it is the duty of management to exercise control and ensure that work is not being performed when it does not want work to be performed.  See 29 C.F.R. § 785.13.  That makes enforcing schedules and tracking employee time essential for compliance and, if the employer knows or has reason to believe that work is being performed, it counts as hours worked.  See 29 C.F.R. §§ 785.11, 785.12. 

    With AI improved employee tracking, it is easier than ever to recognize when employees are working and how much time they are spending on individual tasks.  In 2022, Vice published an article exploring Amazon’s detailed warehouse employee tracking system that used employee’s handheld scanners to discern their actions, and which Amazon ultimately used to discipline employees for time spent “off task”.  As the Bulletin recognizes, AI and employee monitoring tools are now more widely available and accurate, so that an employer can know precisely when an employee is idle and not performing tasks directly related to their job.

    But “hours worked” under the FLSA are not always spent working.  Short breaks and waiting time might require payment, even if the employee is not doing any actual work during those periods, depending on the circumstances.  See 29 C.F.R. §§ 785.14 (noting that being engaged to wait is compensable time), 785.18 (noting that rest periods of short duration from five to 20 minutes must be counted as hours worked).  Though part of the rationale for these rules is that such breaks and waiting time boost productivity and efficiency, the end-result is that measurable productivity and efficiency play no role in the calculation of “hours worked”.  So though AI and an increasingly digital world are making it easier to track employees and their work performance down to the minute, employers cannot claw back “idle” time.  

    So what happens if an employer can definitively prove that an employee was not working at a certain time (using advanced AI tracking) and has a written policy prohibiting idle time while working?  From an FLSA perspective, not much.  With an increase in wearable smart technology, employers now have more tools that collect real time data that AI could use to classify activities as “work” or “idle” time, regardless of whether employees are working desk jobs or are in the field.  Whether an activity is excluded from hours worked under the FLSA is a mixed question of fact and law, meaning that there is no one-size fits all solution and the details matter.  But “hours worked” is not changing to reflect that AI might enable more that accurate tracking, so “idle” time remains a performance issue, rather than an FLSA one. 

    One area of the FLSA that AI may significantly impact is the defense of “de minimis” time.  The de minimis time concept arose because sometimes, small periods of time spent on work related tasks could not be accurately recorded for payroll purposes.  See 29 C.F.R. § 785.47.  De minimis time has impacted cases where employees spent time “donning and doffing” protective gear and equipment, took time uploading data gathered during field work once returning home, and when logging into an employer’s time-keeping program.  Under the de minimis doctrine, the employer bears the burden to satisfy a three-part test which considers: (1) the regularity of the additional work, (2) the aggregate amount of compensable time, and (3) the practical administrative difficulty of recording the additional time.  But with the capability for increasingly accurate employee tracking and monitoring through AI, we may see the erosion of the de minimis doctrine, as situations involving uncertain and indefinite periods of work time become more rare. 

    So, while the FLSA may eventually change to reflect improved employee tracking abilities, for now the traditional rules on “hours worked” continue to apply. 

    Payroll and AI

      The Bulletin also discusses how AI might impact the calculation of wages under the FLSA, aka payroll, due to increased automation.  With the ability for AI systems to track and assess the amount or type of work an employee is performing in detail, AI systems can also recalculate and adjust pay rates in real time to reflect when an employee is completing certain tasks.  For instance, if an employee earns a premium during work time spent in a certain location, or working out of class, an AI system might be able to track and log that without relying on an employee or supervisor to manually tag such an adjustment. 

      Despite the jump in technology, there are a few reasons to be wary about adopting an AI payroll system without close oversight.  AI automation can be extremely useful for employers (and employees) to tackle time-heavy and rote tasks but can also have unintended consequences when complicated variables are at play.  For instance, hiring systems using AI have faced backlash for unintentional discrimination.  And during the early days of image generative AI systems, AI-generated images regularly displayed stereotypical and offensive things that it had not yet “learned” was incorrect.  Unless you designed it, there is a lot unknown about how a given AI system works – it is a “black box” where inputs go in and outputs come out.  AI systems may not properly account for variables, or can have a “bias” built in due to its designer’s own misunderstandings.  So there are several reasons why an AI system might fail to address an unforeseen problem that requires a more “human” touch. 

      AI payroll systems, while hopefully not as prone to discrimination-related mistakes, still pose the danger of oversimplifying or failing to account for legal requirements, especially when their designers do not know what to watch out for.  One hallmark of the FLSA is that for non-exempt employees, employers must pay employees overtime, at one and one-half times their “regular rate of pay”, for any time worked in a workweek in excess of 40 hours.  Beyond the difficulties of tracking time, discussed above, the “regular rate of pay” causes multiple complications in the public sector because of the need to comply with local rules, collective bargaining agreements or memoranda of understanding, the FLSA, and more.  And because the “regular rate of pay” includes “all remuneration” with certain exclusions, it is not always easy to determine which payments made to employees need to be included.  If a payroll vendor is trying to craft a payroll system from the ground up, there are a lot of legal variables that aren’t readily obvious, and quite a few employers are going to have situations where legal advice is needed to ensure proper calculations.

      So an AI payroll system vendor attempting to build their system without fully understanding or accounting for those changing variables may ultimately produce a payroll system that suffers from similar problems that traditionally offered automated payroll systems face.  Even in “man-made” automated payroll systems, we regularly see payroll errors happen frequently due to human error, such as when a bonus is coded incorrectly and not counted in the regular rate of pay, when overtime is due for hours worked, and when certain cash in lieu payments are not included in the regular rate of pay.  Add onto these issues that the designers of AI payroll systems might not know how to properly address both FLSA and MOU problems at the same time, and you can quickly have unintended underpayments (or overpayments) happening with an AI payroll program that provides a quick fix.  And even if an AI payroll system was capable of “learning” what variables or documents to consider, and then seek them out, there is simply no guarantee that the AI payroll system would still be legally accurate without review.   

      In short, AI is likely to provide additional automation that makes it tempting to quickly adopt, but employers are going to want to double-check the work for accuracy.  We heavily recommend, just like we do for all current payroll systems, regular audits and oversight of any payroll system using AI.   

      Future AI Uses in the FLSA Sphere

        AI has the potential to drastically improve the productivity of workers, alter employee monitoring, and quite possibly eliminate the need for certain positions.  One possibility is that AI will allow employees to hold multiple jobs, as rote tasks and data analysis become simpler and quicker to perform.  If an employee works multiple job classifications for a single employer with different rates of pay, maybe the AI payroll system could automatically detect and accurately pay the employee the correct rate of pay for the time spent on each classification, as well as calculate their regular rate of pay to properly pay overtime. 

        Another possibility is that AI could become widely incorporated into wearable trackers issued to all employees.  We already have law enforcement personnel using body-worn cameras, is it a stretch to have all employees wear some sort of similar tech that allows constant tracking during the workday?  There are already hi-tech eyeglasses on the market that allow for video recording without much added bulk, and we would anticipate it will not take long for AI to become incorporated.  Will the FLSA need to adapt so that there are more protections for “hours worked”?  With more advanced AI technology creeping into everything, we might find out the answers to the above answers sooner rather than later.

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        The Fourth Industrial Revolution will be an age of automation and analytics powered by Artificial Intelligence (“AI”). It promises futuristic realities with deep-level analytics, next-level automation, and omnipresent algorithmic workplace monitoring.

        As AI tools and technology becomes more affordable and widely available, it is likely that public agencies, like other employers, will adopt AI in order to operate in a more efficient and cost-effective manner. As the public agency use of AI increases, it is unavoidable that the technology will impact employee working conditions and the method by which they perform their jobs and potentially, in the longer term, the nature of services provided by public employees and the size of public agencies.

        These considerations should both interest and concern management. As public agencies begin to consider how to leverage AI, management must consider how to do so to the benefit the public and how to do so while accounting for and complying with their statutory collective bargaining obligations.

        This article addresses situations in which public agencies may use AI and how the adoption and implementation of such tools and technology will affect agencies’ duty to bargain changes related to wages, hours, terms and conditions of employment.

        AI WILL CHANGE THE WAY WE WORK – GET USED TO IT!

        The role of automation and the use of analytics in the workplace is not new. However, the 2021 release of OpenAI’s ChatGPT ushered in a new era of AI with a more powerful product and new possibilities and use cases. While the AI tools available today are even more powerful than the 2021 version of ChatGPT, the adoption of such technology and its application by public agencies will likely be slowed, but not necessarily stopped, by applicable statutory obligations that require negotiation on certain effects or impacts of management decisions, if not the decisions themselves.

        EMPLOYEE CONCERNS ABOUT AI

        Despite the barriers to the immediate adoption of AI by public agencies, many public employees are reasonably concerned about the introduction of AI into the workplace.

        Public employees, like employees in the private sector, fear that AI will result in mass layoffs and workforce reductions or job replacement, re-categorization, or re-assignment. Public employees are also concerned about less fundamental, but nevertheless significant changes to working conditions precipitated by AI, such as mandatory training on and use of AI and AI-powered surveillance.

        As witnessed in recent and high profile labor disputes with longshoreman on the East Coast and earlier strikes in Hollywood with screen actors and writers, use of automation and AI and demands by workers for protections against such technology were key issues in bargaining.

        While fears about widespread layoffs and workforce reductions in the public sector are likely overstated at present and not a certainty in the immediate future, one thing that is certain is that change is coming to workplaces, including public agency workplaces. A recent study predicted that, while only nine percent (9%) of jobs presently face a high risk of reduction or replacement due to automation or AI, approximately 60% of jobs involve duties, functions or tasks that could be automated or performed using AI tools or technology.

        LEGISLATIVE AND EXECUTIVE RESPONSE TO PUBLIC AGENCY USE OF AI

        In California, the Legislative and Executive branches are beginning to grapple with the use of AI in workplaces, including public agency workplaces.

        The recently concluded legislative term included a number of AI-related bills, including several that, if enacted, would have affected public agencies and their use of AI. One bill, Senate Bill 1220, proposed to protect public employee jobs by prohibiting public agencies from using AI tools and technologies to automate functions and tasks performed by employees in call centers.

        Governor Newsom’s veto message regarding this bill was instructive. In the message, he stated the following:

        Technology can and should enhance the experience of the workforce – by making work more efficient and pushing us to attain new heights of achievement and innovation. At the same time, we must consider appropriate guardrails and control the risks posed by this technology.

        Governor Newsom then explained that he signed Executive Order N-12-23 to develop responsible AI deployment in the state and that the state would be issuing forthcoming criteria to evaluate the impact of AI on public employees.

        As a result of the Governor’s veto, public agencies may continue to deploy AI tools and technology to perform the duties, functions and tasks of public call center workers. However, this is the beginning of the story and not the end and there is likely to be similar, or even more expansive, legislative introduced in the future that is designed to protect public employee jobs and regulate the use of AI by public agencies.

        RESPONSE BY MANAGEMENT AND THE DUTY TO MEET AND CONFER

        While public agencies have the right and obligation to direct their workforces, this right is not without limitation.

        Public agencies have an obligation to meet and confer in good faith with employee organizations regarding changes to wages, hours, and other terms and conditions of employment that affect the employees that they represent.
        When it comes to decisions to adopt new AI tools and technology, public agencies must carefully consider whether the decision affects a matter within the scope of representation. Agencies must refrain from making any change to the terms or conditions of represented employees’ employment without notifying the employee organization of the change and negotiating the change. (County of Santa Clara (2022) PERB Decision No. 2820-M.) Agencies that unilaterally make such changes risk the employee organization filing an unfair labor practice and the Public Employment Relations Board (“PERB”) undoing the change, potentially at great expense to the agency.

        As AI tools and technology become more widespread and widely available, public agencies that adopt such tools and technology should be mindful of their the duty to meet and confer with employee organizations before implementing any decisions that affect or might affect the terms and conditions of employees’ employment.

        CONSIDERATIONS BEFORE DECIDING TO IMPLEMENT AI

        Once a public agency makes a decision to implement an AI tool that effects a matter within the scope of representation, the agency must provide the employee organization with notice and an opportunity to meet and confer regarding the changes to matters within the scope of representation. (Gov. Code §§ 3501, 3505.)

        Adopting and implementing AI tools will likely require employers to engage in meet and confer on a wide range of subjects, including, but not limited to, where the agency intends to impose new training requirements related to AI (See City of Sacramento (2020) PERB Decision No 2745-M, pp. 17-20) or where the agency intends to use AI to monitor the workplace and worker conduct and productivity. (See Rio Hondo Community College District (2013) PERB Decision No. 2313, pp. 14-16.)

        Where the underlying decision is a non-negotiable management right or prerogative, a public agency may seek clarification from the employee organization as to what exactly the employee organization proposes to bargain in order to determine whether the subject identified by the employee organization is negotiable.

        In Compton Community College District (1989) PERB Decision No. 720, pp. 14-15, PERB stressed that an employer may implement a nonnegotiable management decision prior to completing effects bargaining in the following circumstances:

        1. The implementation date is based on an immutable deadline “or an important managerial interest, such that a delay in implementation beyond the date chosen would effectively undermine the employer’s right to make the nonnegotiable decision”;
        2. The employer provides sufficient notice of the decision and advance notice of the implementation date “to allow for meaningful negotiations prior to implementation; and
        3. The employer negotiates in good faith prior to implementation and continues to negotiate in good faith after implementation as to those subjects not necessarily resolved by virtue of the implementation.

        Public agencies should be prepared to provide notice of decisions involving the adoption and implementation of requirements related to AI or technology that relies on AI and be prepared to engage in meaningful negotiations on such decisions, or the effects or impacts of that decision.

        FUTURE CHANGES TO WORK AND WORKFORCES

        Looking forward, public agencies should consider more profound changes that AI may have on public agencies, including the services performed by public employees and the size of public agency workforces.

        The adoption and use of AI tools and technology may, at some point, cause or result in layoffs, work force reductions and restructurings in public employee job classifications that perform functions and tasks that lend themselves to automation or performance by AI, such as call center workers.

        Such significant changes will undoubtedly cause employee organizations to request to negotiate public agency decisions to adopt tools or technologies that have such a disruptive capacity or, at a minimum, the effects or impacts of the decisions to do so.

        Moving forward and into this new age, it is more important than ever for public agencies to remember that old rules still apply and they must discharge their statutory obligations as they relate to these new and powerful AI tools and technology.

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        Senate Bill (SB) 399, the “California Worker Freedom from Employer Intimidation Act” (“Act”), will prohibit compelled attendance at employer-mandated meetings to discuss political and religious matters, including the decision to join or support a labor union. The Act adds the new Labor Code section 1137, and is effective January 1, 2025.

        Prohibition Against Employer-Mandated Political and Religious Meetings:

        The Act strictly prohibits employer-mandated meetings, sometimes referred to as “captive audience meetings,” in relation to a union’s organizing effort, or in which employees are required to attend and listen to the employer’s opinion about religious or political matters, including the decision to join or support a labor organization. A meeting is considered mandatory if an employee is subject to “discharge, discrimination, retaliation, or any other adverse action” because the employee declines to attend the meeting. The prohibition also applies where an employee declines to receive or listen to communications about the employer’s opinion about political or religious matters. Under the Act, “political matters” include matters relating to elections for political office, political parties, legislation, regulation, and the decision to join or support any political party or political or labor organization. “Religious matters” include matters relating to religious affiliation and practice and the decision to join or support any religious organization or association.

        No Adverse Action for Failure to Attend:

        If an employee is working at the time of the meeting and elects not to attend, they must continue to be paid while the meeting is held.

        Employers cannot subject, or threaten to subject, an employee to discharge, discrimination, retaliation, or any other adverse action because the employee declines to attend an employer-sponsored meeting covered by the Act, or declines to listen to any communications regarding the employer’s opinion about religious or political matters.

        For purposes of the Act, the definition of employer includes an agent, representative, designee, or person or group of persons acting directly or indirectly on behalf of or in the interest of an employer with the employer’s consent.

        Applicability of the New Law and Exemptions:

        In addition to applying to most private employers, the Act applies to all California branches of state government, cities, counties, special districts, political subdivisions of the state, and public school districts.  However, the Act expressly does not apply to:

        • An educational institution requiring a student or instructor to attend lectures on political or religious matters that are part of the regular coursework at the institution; or
        • When an employer requires employees to undergo training to comply with the employer’s legal obligations, including obligations under civil rights laws and occupational safety and health laws.

        The Act expressly does not prohibit an employer from communicating any of the following:

        • Any information that the employer is required by law to communicate, but only to the extent of that legal requirement.
        • Any information that is necessary to perform their job duties.
        • An institution of higher education from participating in any communications with its employees that are part of coursework, any symposia, or an academic program at that institution.
        • A public employer from communicating information related to a policy of the public entity or any law or regulation that the public entity is responsible for administering.

        Penalties:

        An employer who violates the new Act is subject to a civil penalty of $500. The California Labor Commission is authorized to enforce the Act.

        In addition, any employee who has suffered a violation of the bill’s provisions is authorized to bring a civil action, and petition for injunctive relief.

        Current Public Employer Restrictions on Political and Religious Activity in the Workplace:

        California public employers are already subject to significant restrictions on political and religious activity in the workplace, and therefore the Act does not create significant changes for the public sector. For example:

        1. Public officials in cities, counties, state agencies, political subdivisions, and special districts are prohibited from:

        • Using their authority to influence the outcome of a person’s position, promotion, or compensation within agency;
        • Soliciting political contributions from employees, except when part of solicitation of a significant segment of the public; and
        • Participating in political activities of any kind while in uniform.[1]

        Furthermore, by establishing rules and regulations, agencies may, and often do, prohibit or restrict officers and employees from engaging in political activity during working hours or on agency premises.[2]

        2. Public employers cannot discourage public employees and applicants from:

        • Becoming or remaining members of a labor organization,
        • Authorizing labor representation, or
        • Authorizing dues deduction for a labor organization.[3]

        Of note, the Act expressly carves out an exception for a public employer holding a new employee orientation, as defined in Government Code Section 3555.5, or a provider holding an orientation as described in Welfare and Institutions Code Section 12301.24.

        3. Before disseminating mass communications to public employees or applicants concerning employees’ rights to join or support a labor organization, or to refrain from joining or supporting a labor organization, public employers are required to meet and confer with the exclusive representative in advance regarding the content of the mass communication. If the public employer and the exclusive representative do not come to agreement on the content of the employer’s mass communication, the public employer must simultaneously distribute with its communication a separate communication of reasonable length submitted by the labor organization.[4]

        4. The Establishment Clause of the U.S. Constitution, and provisions of the California Constitution, prohibit local government agencies from promoting or endorsing religion, and therefore a public employer cannot force employees to participate in religious activities, or promote one religion over another.

        Potential Legal Challenge:

        SB 399 will likely be subject to a legal challenge alleging that the Act violates First Amendment rights under the United States Constitution. In anticipation of such legal challenges, the Act contains a section that automatically severs any provision of the Act held legally invalid.

        Next Steps for Employers:

        While the Act has little impact on public employers, the new legislation creates an opportunity to review and update applicable policies and train supervisors regarding restrictions on political and religious activity in the workplace, including the new restrictions on mandatory, “captive audience” meetings. Attendance at any meetings that are covered by the Act should be strictly voluntary (and existing law strongly counsels against an agency hosting even non-mandatory employee meetings on religion or partisan politics). Employers are encouraged to reach out to their trusted legal advisors with any questions about SB 399.

        For more information about new labor and employment legislation that will affect public agency employers, please join LCW for our Public Agency Legislative Roundup Webinar on October 24, 2024. 

        [1] Government Code §§ 3201-3209.

        [2] Government Code § 3207.

        [3] Government Code § 3550.

        [4] Government Code § 3553.

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        This post originally appeared in June 2023 and has been reviewed and updated for October 2024.
        1. Be Purr-Real

        Generally, your boss can say no to your pet. However, California requires employers to accommodate employees with assistive animals, such as service dogs (or miniature horses) and emotional support animals. So, it might be tempting to claim that your pet is an assistive animal, even if they are not. DO NOT DO THIS!

        Making a false claim that your pet is an assistive animal is disrespectful to people living with disabilities. Instead of boosting morale, misrepresenting your pets could lead to strained relationships with coworkers who may view it as unfair or a breach of trust.

        Instead, honestly ask your supervisor if you can bring your pet. You can discuss the potential benefits and positive effects that a pet’s visit can have on the workplace. Be prepared to address any potential concerns such as allergies, safety, or distractions. Assure them that you will take full responsibility for your pet’s behavior and well-being, and propose practical solutions to address any valid concerns.

        2. Check the Paw-licies

        Check if your workplace has a pet policy. Familiarizing yourself with this policy will help you understand the guidelines and expectations surrounding pets in the workplace. Additionally, it is crucial that you consider local ordinances and regulations that may apply to non-assistive pets in the workplace. Different jurisdictions may have specific requirements or restrictions that you need to be aware of to ensure compliance. These regulations could also depend on the type of work you do. For example, it is likely less of an issue to bring your dog to a Parks and Recreation program than it would be to bring your dog to the kitchen for Meals on Wheels.

        3. Make Sure Your Pet is Vetted

        We are not talking about going to the vet—though that is also important! Vetting your pet means making sure that your pet is up to the challenge. Pets can experience stress when exposed to unfamiliar surroundings, noises, and interactions. If your pet will be in physical contact with others, make sure that your pet has a friendly disposition, is well trained, and can socialize with humans and other animals.

        You need to evaluate your pet’s temperament and personality and make honest assessments. Remember, you promised to be personally responsible for your pet’s behavior. If your pet is not ready for the office life, results could be disastrous. Keep in mind that you can be liable for injuries even if you did not intend to cause any harm. Beyond property damage or injuries, a bad experience at the office will stress your pet and could leave lasting trauma.

        4. Bear in Mind, We’re Not All Party Animals

        Pets can inspire either adoration or apprehension. In some cases, our pets can inspire both! Some people might want to cuddle with your furry friend but their allergies say otherwise. Be prepared to set up “no pet” zones for people who cannot be around animals.

        Fear and dislike of pets are also valid emotions experienced by many. These feelings sometimes stem from past traumas, cultural differences, or personal preferences.

        If you have an exotic pet (like spiders or snakes), you are probably already aware that your pet might scare some people. In these circumstances, you may be liable for injuries even if it was the result of your coworker’s fearful reaction to the pet, and not your pet actually doing anything harmful.

        Before bringing your pet to work, make sure everyone is on board. This applies to all kinds of pets. Remember that your coworkers did not sign up for this. Make it clear to them that you understand that your pet would be an unexpected addition to the work environment. Recognizing a hesitant coworker’s concerns might even put them on your side.

        5. Being Top Dog Comes With Responsibility

        Employers—understand that the buck stops with you. An employee or a member of the public can initiate legal action against you for injuries caused by your employee’s pet, even if your employee promised to take full responsibility. This is an inherent, unavoidable risk when allowing pets in the workplace.

        Mitigate the risk of unwanted consequences as much as you can. It helps to have a carefully crafted pet policy. This policy should outline expectations from your employees and any restrictions (such as pet free zones). It should also make clear that your employees are responsible for their pet’s actions. Be prepared to resolve disputes and complaints fairly and professionally. When in doubt, ask a lawyer!