Why businesses need to be cautious about jumping into AI – The Business Journals
The rapid spread of artificial-intelligence tools such as Open AI’s ChatGPT has supercharged state, local and national regulatory efforts — and business owners will need to be cautious.
This July, New York City finalized a set of rules around the use of AI in hiring. It stems from a 2021 law that requires any algorithmic tool that reviews, selects, ranks or eliminates candidates for employment or promotion to be subject to some limitations, including an annual independent “bias audit” with a publicly available summary.
It has been praised by some as a step in the right direction, while others have criticized its vagueness and enforcement mechanisms.
But New York is one of many local governments taking action as businesses look to harness more widely available forms of generative AI tools to use in hiring, decision-making and content creation.
So far in the 2023 legislative session, at least 25 states, Puerto Rico and the District of Columbia have introduced artificial-intelligence bills, and 14 states and Puerto Rico either adopted resolutions or enacted legislation, according to a report by the National Conference of State Legislatures.
That includes:
But this is just the latest wave of such laws. In 2020, both Illinois and Maryland adopted restrictions on the use of AI in video evaluations, including facial-recognition tools. They require the interviewee to essentially consent to the use of the tools.
Niloy Ray, a shareholder at law firm Littler Mendelson PC, said laws have usually been focused on three areas of concerns for governments: bias, equity of access and privacy.
But, he said, in states like California, widening the net on who could be considered at fault or liable in a lawsuit could mean problems for both the creators of the AI, who are not responsible for how a tool is used, and the user, who didn’t create the AI in the first place.
In the European Union, Ray said, there is a push to separate liability at the point in which the software is sold, so that creators and users have different liabilities at different stages of the process. The Federal Trade Commission has already been explicit about its plans to go after companies it feels misleads others about its AI products or services.
So what should business owners and managers do?
Ray said not experimenting or exploring what AI has to offer is a bad call, as competitors will be. But it is also not responsible to charge headlong into a technology that could have risks.
“I think this needs to be at the highest levels and percolating downwards — it should not be left up to the end user like the recruiter or recruiting department to decide how to use these tools. Because of all the risks, new and old, that come with these tools, a policy is really critical,” Ray said.
Ray stressed that, first, businesses need to figure out how they are already using AI, because they often are, even if they don’t know it. Surveys have found a significant portion of workers are using AI on the job — with or without their manager’s knowledge.
He said businesses should next bring their stakeholders together and decide where they might want to use AI, what they would use it for and what the clear benefit would be. Then, the company should educate its workforce on how to use the technology and what it wants to accomplish.
“We are all going to level up with respect to AI, just as we did with respect to computers or electricity or fire or any other invention. And AI is on that level,” Ray said. “If you are not using this in a practical matter, your competitors are.”
But the euphoric wave of enthusiasm for the technology among tech entrepreneurs and others is meeting a growing backlash — one that could create a legal quagmire for business owners, as well as skepticism that generative AI and “large language models” these systems are built on are not so much intelligent as they are exceptionally good at predicting strings of text without the reasoning or knowledge to back it up.
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