What AI Regulations From the EU and FTC Mean for HR Practitioners

Last week the EU and FTC released proposed legislation for AI technology. Here is what it could mean for the future of HR technology, shares, Ike Bennion, director of product marketing, Innovation and Strategy, Cornerstone OnDemand.

May 6, 2021

Last week the EU and FTC released proposed legislation for AI technology. Here is what it could mean for the future of HR technology, shares, Ike Bennion, director of product marketing, Innovation and Strategy, Cornerstone OnDemand.

In almost timed succession, last week, the European Union and the FTC fired shots across the bow of commercial industry about the use of Artificial Intelligence (AI). Each takes a different approach, but the underlying message is the same: AI and its use will be scrutinized in the two largest global economies.

A Tale of Two Markets

The differences of these proclamations are just as important as the similarities in their impact. The EU’s is 108 pages of proposed legislation that likely will take a few years to pass and focuses on regulating the potential risk that AI poses to individuals. The FTC’s proposed legislation is a blog that calls out three broad legal powers the Commission can use to regulate bias and misleading AI advertisements immediately.

Enforcement also looks different. There has been a significant gutting of the FTC’s budgets in recent history, as well as some legal precedents, which raises the question of how much enforcement would actually occur. The EU’s proposal promises to look similar to GDPR, which had significant successful influence from lobbyists in the proposal and feedback period. There are certain self-enforcement conditions that could weaken actual enforcement. Both bodies assume they would be able to “peek under the hood” to execute the legislation.

Due to intersecting laws that provide regulatory powers that could justify enforcement of AI, the FTC could begin oversight immediately. The EU’s timeline is probably several years out if we look at the four years between proposal and passage of GDPR as a parallel.

Learn More: How Will Your Company Adapt To the New Flexible Workforce in 2021?

What It Means

What impacts might this have on HR technology? Actual enforcement and its effects on the market will be less of the influence of these two announcements, at least in the short term. The more certain impact is how they will shape the AI ethics conversation.

The first major “rounding out” of the ethics conversation is how we talk about and advertise AI. It is fair to say more than one HR technology buyer has thrown up their hands in exasperation when evaluating various AI technologies in the market today due to the liberal use of the term “AI”. Many things as rudimentary as automated workflows or algorithms are labeled as AI alongside true technological knife’s edge products. Hopefully, these announcements start a conversation in the market about how we label various technologies and arm buyers to be more informed when vetting them.

The second major point of these announcements is the consideration of assessing the risk of impacts from AI. Immanuel Kant may have put it the most succinctly: “Live your life as though your every act were to become a universal law.AI promises to the scale almost as if it were universal law. So, we have to ask ourselves what “paper cut” biases and discriminations present in current data and technologies scale to become societal wounds as we adopt AI. And how do we regulate and monitor those over time according to how much risk each AI imposes? When it comes to someone’s livelihood, everyone, including vendors and HR practitioners, has to be on guard against magnified inequity.

The third follows closely after the second: transparency. Some technologies in the market today are not just black boxes but can be considered black boxes within black boxes. Trying to keep proprietary information secret to preserve a competitive edge is a widespread method even beyond tech but is very common when it comes to AI. Companies will go to extensive lengths to reassure buyers that productized AI is low-risk but short of showing “what’s under the hood”. Vendor cooperation with academia, non-profits, and the government will be key to study the impacts of specific AI while preserving the competitive edge.

Learn More: How AI-powered Surveys Can Boost HR Insights and Employee Experience

What HR Buyers Need To Know

While the announcements made by both the EU and the FTC are bold, we are not sure if this will mean immediate action, especially for technologies specific to HR. Very likely, this is the first tool in a regulator’s toolbelt when monitoring the competitiveness of very large multinational tech firms.

But buyers can still enact the important ethical principles when making buying decisions and shape vendor practices:

  • Plan in procurement: Set aside periods to specifically consider any AIs within the products you are looking at. Make sure the right subject matter experts from your organization will be present.
  • Do not forget data: Be sure to ask about the data — what data does this AI rely on? How does the AI continue to gather data over time?
  • Ask about the AI: Specifically, ask how the success of the AI itself is measured. What justifies this as AI? What specific technologies does this rely on (NLP, open graph, emotion recognition, etc.)? What are its specific outcomes?
  • Ask about ethics: Ask about how the data and the AI were assessed for any bias or discrimination. What potential risks has the company considered when thinking about AI? How much transparency does the company provide to their AI?

The HR industry is rightly attracted to the promise of artificial intelligence, but we have to balance against the human element. Decisions made the right way will greatly improve the competitiveness of organizations and individuals, especially those who are marginalized and could greatly benefit from thoughtful technology.

Ike Bennion
Ike Bennion

Director of Product Marketing, Innovation and Strategy, Cornerstone OnDemand

Ike Bennion is the director of product marketing, innovation and strategy at Cornerstone, which includes market analysis and strategy development for learning products. He has written and presented on various HR functions, including Artificial Intelligence, learning, performance, recruitment, content and benefit strategy. Focused on helping organizations realize the power of their people, Cornerstone is a founding member of the Velocity Network, which puts people in control of their data by helping them accumulate a digital wallet filled with their validated experiences, skills, certifications and licenses and more.
Take me to Community
Do you still have questions? Head over to the Spiceworks Community to find answers.