As artificial intelligence continues to revolutionize talent acquisition, organizations must navigate the complex regulatory landscape governing its use. There are emerging regulations and best practices businesses need to be aware of to leverage AI responsibly while maintaining compliance in this evolving space.
The regulatory landscape: A snapshot of key changes
AI regulation is seeing rapid changes across the globe. Compliance is becoming increasingly complex as new laws intersect with existing frameworks like the U.S. Equal Employment Opportunity Commission (EEOC) guidelines and the General Data Protection Regulation (GDPR) in the European Union.
Laws such as New York’s Local Law 144, the Illinois AI Employment Act, and the upcoming implementation phases of the EU AI Act are changing risk categories. This “risk-based approach” aims to curb unethical AI usage, such as discriminatory algorithms, while fostering accountability. Key highlights from these developments include:
- EUAIA Enforcement Timeline: Originally slated for August 2026, there’s a potential delay to 2027 due to the Digital Omnibus Act.
- Illinois AI Employment Act: Prohibits discriminatory proxy measures like ZIP codes and mandates transparency around AI usage.
AI regulations are not meant to generally prohibit its use in hiring outright. Rather, they promote responsible practices that align with long-standing employment frameworks like Title VII and the Uniform Guidelines on Employee Selection Procedures and pre-existing anti-discrimination laws.
Reputable AI vendors are increasingly incorporating compliance, providing features that enable companies to configure data retention settings and deliver custom documentation, supporting clients in their adherence to regional laws.
Complexity in global compliance
Challenges surrounding the patchwork of global AI regulations, particularly in regions like Europe, North America, and Asia-Pacific remain. For example, tensions between the EU AI Act’s conformity assessments and GDPR’s commitment to data minimization — a dichotomy requiring organizations to tread carefully.
Further there are regional nuances:
- Asia-Pacific: Countries like Singapore and China are emerging as early adopters of AI regulations, each with frameworks varying between principles and prescriptive requirements.
- Colorado AI Act: This state legislation mirrors the EU AI Act’s risk-based approach and assigns dual responsibilities to “providers” (developers) and “deployers” (users) of AI technologies.
Talent professionals should adopt a proactive mindset. Both AI innovation and regulation is changing very, very fast.
AI’s role in promoting fairness
While skepticism about AI in employment persists, AI can improve fairness — offering consistent job related evaluation and robust documentation compared to human decision-making.
Where you’re using AI technology, you can consistently have documentation on whether the tool worked the way it should have worked, versus relying on a hiring manager to take notes.
Candidates increasingly view AI evaluations as more unbiased compared to human reviewers. Candidates are seeing AI as a way of being more consistent in their evaluations than leaving it to human evaluators.
This change in perception is attributed to the responsible use of AI by organizations and improvements in explainability and transparency over the past several years.
Industrial organization psychology’s impact with AI
Most foundational practices in industrial organizational psychology remain valid in the AI era.
These include:
- Job relevancy: Employers must establish that AI assessments measure competencies explicitly linked to performing the job.
- Transparency: Candidates should understand how AI is being used and have the option to opt out, ensuring informed consent.
- Alternative Paths: Providing a right to non-AI evaluation methods for candidates either due to accommodations or those uncomfortable with the use of AI.
- Bias Monitoring: Regularly evaluating hiring outcomes to identify and mitigate subgroup disparities, both in development and when the AI is in use.
- Documentation: Maintain robust records for auditing and compliance needs — critical as laws introduce stricter audit trails, such as FEHA in California.
These are not entirely new concepts but extensions of existing compliance practices adapted to AI technologies.
Best practices for implementing AI tools
As compliance grows stricter, here are actionable recommendations to help talent teams navigate AI adoption:
- Research vendors: Evaluate vendors not based on promises of bias elimination but on their commitment to transparency, mitigation strategies, and robust documentation.
- Consider existing frameworks: Leverage established compliance steps in hiring, such as job analysis, consistent candidate evaluation, and data audits, to extend them into your AI strategy.
- Promote candidate comfort: Customize communication touchpoints transparently explaining AI usage, fostering trust without alienating candidates unfamiliar or uncomfortable with artificial intelligence.
Preparing for compliance in 2026 and beyond
Organizations are increasingly realizing that AI, when implemented properly, can improve hiring effectiveness and equity.
Companies should familiarize themselves with AI regulations to provide clarity on the legal requirements and best practices needed to responsibly integrate AI into hiring processes. As regulations continue to evolve, the need for transparency, robust documentation, and fairness grows — not as new concepts but extensions of existing frameworks.
By partnering with ethical AI vendors that stay at the forefront of evolving regulation, talent teams can stay ahead, ensuring compliance and inclusivity in their hiring strategies. Whether you’re actively testing AI solutions or just beginning to explore its capabilities, it’s important to stay informed, proactive, and agile in the face of change.
