Artificial intelligence is poised to disrupt employment law, where it may alter a worker's overtime exempt status or contribute to discriminatory compensation decisions, attorneys say. …
Organizations are looking to AI to improve efficiency or effectiveness in the workplace, but the use of AI comes with wage and hour compliance risks, said Adam Forman, member of management-side firm Epstein Becker & Green PC.
"I think that the proliferation of artificial intelligence workplace tools absolutely will have impact on the [Fair Labor Standards Act] and how it's applied," Forman said.
AI Could Erode OT Exempt Duties Test
In order to be properly classified as exempt from overtime under the FLSA's white collar exemptions, an employee must be paid a salary and must meet the duties test of the particular exemption at hand. …
But these duties requirements can conflict with the "raison d'etre" of workplace artificial intelligence, which is to automate tasks and decisions, Forman said.
"There's often these arguments which they call 'cookbook recipe arguments,' where they say, I have no judgment or discretion. My employer gave me a cookbook and told me to follow the recipe," Forman said. "Think about that on steroids because that's what AI, in particular generative AI, is doing."
Part of the duties test for the executive exemption is that the worker must regularly supervise and direct the work of two or more full-time employees. But if AI starts taking away low-skilled automatable jobs, for example, a manager who is supposed to be exempt from overtime as an executive may not have the requisite number of people to supervise, Forman said.
"The more you start taking away those functions that are done by humans, the more it will call into question whether that … exempt supervisor is actually regularly directing two or more people," he said.
A similar compliance concern may arise if AI is involved in hiring decisions — another feature of the executive exemption duties test.
"It starts eroding the unique features that employers frequently and historically have relied upon to support their FLSA white collar exemptions," Forman said. …
Independent Contractor Classification Could Get Harder
AI will not only present compliance challenges for classification of overtime exempt individuals. It could also disrupt the analysis of whether a worker is an independent contractor or an employee. …
But one of the touchstones of employee status is the idea of control, Forman said.
The use of proprietary AI software by a worker dubbed an independent contractor may challenge that analysis.
"The more the employer is controlling the means and methods of the worker's work, the more an argument could grow that [the] worker is misclassified as an independent contractor," Forman said.
AI is going to make it harder for employers in certain circumstances to argue that a worker is an independent contractor, Forman said.
"It's one thing for me to say, 'hey, I want to contract you to come cut my lawn. Bring your lawn mower,’" he said. "It's another thing for me to say … ‘you've got to use my proprietary AI so you'll have to come on my site. It only works if you're on my WiFi with my machines’ … Again, that could be a contributing characteristic of employment and that's a concern for employers."