Littler-Technology in Recruiting - shrmstl.org in Recruiting.pdf · ⎻Applicant tracking systems...

10/17/2019

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Technology in Recruiting and Hiring: Hidden Legal RisksFriday, October 18th, 2019

© Littler Mendelson, P.C. | 2019 Proprietary and Confidential

Presented by

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CHARLES (CHAD) E. REIS, IV LILLIAN T. MANNING

Shareholder

Littler| St. Louis Office

314.659.2002

[email protected]

Associate

Littler | St. Louis Office

314.659.2001

[email protected]


Agenda

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• Defining Artificial Intelligence and Big Data

• Digital Hiring Platforms and On Demand Digital Interviews

⎻ Hidden Legal Risks:

⎻ Potential claims of discrimination and potential of disparate treatment and impact when facially neutral algorithms are used to screen candidates

⎻ Potential claims of ADA accessibility issues with online interviews and applications

• Crowdsourcing

⎻ Hidden Legal Risks: Wage and hour concerns under the FLSA

• Automated Background Checks, Use of Social Media, and Biometrics

⎻ Hidden Legal Risks: Privacy and FCRA concerns

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HR and Recruiters Are Buzzing About AI

The Rise of AI in Recruitment | AI for Recruitment is Here

© Littler Mendelson, P.C. | 2019 Proprietary and Confidential 5

AI Finds Cute Cats


AI Recommends Movies and TV

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AI Orders Pizza


Use of Artificial Intelligence in Talent

Acquisition

© Littler Mendelson, P.C. | 2019 Proprietary and Confidential© Littler Mendelson, P.C. | 2019 Proprietary and Confidential

DATA and/or ARTIFICIAL INTELLIGENCE (AI)

85% of talent professionals and hiring managers say they are the top trends impacting how they hire

https://business.linkedin.com/talent‐solutions/blog/trends‐and‐research/2018/4‐trends‐shaping‐the‐future‐of‐hiring

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Big Data and Artificial Intelligence

• “Big data”: extremely large data sets used to learn about and predict behaviors and preferences using advanced data analytics methods

• Involves:

⎻ Large number of unstructured data sources that cannot be analyzed using traditional methods

⎻ Social media sites such as LinkedIn or Facebook

⎻ Online job sites such as Monster, Indeed, etc.

⎻ Applicant tracking systems that identify large numbers of potential candidates



• “Artificial intelligence” / “AI”: computers, systems, or technologies that attempt to simulate human intellect

⎻ The goal is for AI is to think, learn, and in particular, adapt⎻ Includes machine learning:

⎻ System learns and changes programming based on new data inputs

⎻ Not reliant on human intervention to explicitly change programming



• You could say that in many cases, Big Data and AI are “joined at the hip”⎻ The algorithms used to analyze

Big Data are AI⎻ Big Data provides AI with the

“fuel” needed to make those algorithms “smarter”

• These systems are now being used to Recruit, Screen, Interview, and sometimes Hire candidates.

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Digital Hiring Platforms and On Demand Digital Interviews Present Discrimination Risks

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Digital Hiring: Sourcing Potential Candidates with AI and Big Data

• External sourcing: search web for “passive” candidates from large data sets

⎻ Vendors advertise that they can provide information on:

⎻ Candidate characteristics, including race, sex, other protected characteristics

⎻ When a candidate is “ready” to leave current employer

⎻ This information allows employers to evaluate candidates and assign “fit” scores of the likelihood of successful performance and alignment with the company’s mission and values

⎻ Chatbots also automatically engage potential candidates on social media based on this information

• Internal sourcing: search existing applicant tracking system to identify prior applicants for new or different roles within the company


Digital Hiring: Platforms

• HireVue | Assessments, Video Interviews, Scheduling | https://www.youtube.com/watch?v=3yRx7lm4poc

https://www.businessinsider.com/hirevue‐ai‐powered‐job‐interview‐platform‐2017‐8

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• HireVue

⎻ Algorithms pick up on more than 20,000 visual and audio cues (smile, furrowed brow, tone of voice, word choice) and compare to similar data collected from existing top employees

⎻ Algorithms aim to mimic how human interviewer might evaluate a candidate, but advertise greater consistency



• Pymetrics | Games, Customized IA, Bias‐Free Algorithms

⎻ Create custom recruitment algorithms based on how top employees at each client company score on online games that measure 90 different traits – such as attention or altruism

⎻ Companies use Pymetrics is to improve fit and diversity of teams



• Many Others

⎻ HiredScore

⎻ ZipRecruiter

⎻ Mosaictrack

⎻ Chequed

• RippleMatch – a marketing/recruiting tool for college students

⎻ RippleMatch aims to increase awareness of company opportunities with target audiences of candidates without excluding any from applying for the position.

⎻ How?

⎻ RippleMatch defines a target profile using a holistic algorithm that takes into account your hiring preferences for the position (major, GPA, experience) which trains the algorithm to assign a “fit score.”

⎻ Candidates receive a marketing email asking them to confirm interest. Employer receives a feed of candidates with expressed initial interest.

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Digital Hiring: Predictive Model Questions

• By combing through publicly available information, AI through Big Data can answer:

⎻ How to identify diverse new talent?

⎻ Which applicants are likely to be the best performers?

⎻ Who are the best performing employees?

⎻ Which employees are the most adaptable to change or the most critical to the organization?

⎻ Which employees are likely to voluntarily quit in the next six months?

• Vendors promote that this can increase availability and reliability of information resulting in increased accuracy in decision‐making criteria and reduced bias.


Digital Hiring: Compliance Implications

• Title VII, ADEA, and ADA

⎻ Disparate Impact: Facially neutral algorithms may exclude protected classes of individuals

⎻ Disparate Treatment: Disabled individuals could be excluded by the application method

• Federal Uniform Guidelines on Employee Selection Procedures (“UGESP”)

⎻ Has compliance requirements, which were developed long before AI

⎻ Requirements may apply if big data and AI are used as “cutoffs” to advance individuals

• Office of the Federal Contract Compliance Programs’ (“OFCCP”) Internet Applicant Rule

⎻ OFCCP requires government contractors to maintain searches of resume databases and retain resumes of individuals considered for a job, and compliance is probably triggered with the use of AI

• Stored Communications Act (“SCA”)

⎻ Prohibits accessing private electronic communications from other service providers (i.e., Gmail, Facebook), but allows access to communications provided by employer (i.e., company email server)


Digital Hiring: Video Interview Concerns

• Potential for disparate treatment and impact under Title VII, ADA, and ADEA with use of AI for Video Interviews

⎻ Issue 1:

⎻ Algorithms used in reviewing video interviews may look for a particular intonation, style of smile, tone of voice, or word choice for ideal candidates

⎻ If individuals of particular race, religion, etc., do not fit within the algorithm, they may receive a lower rating

⎻ AI may not be able to recognize why a candidate is getting a particular score or may inappropriately focus on other factors that are not necessarily relevant to the candidate’s qualifications for the position

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Digital Hiring: Algorithmic Bias Concerns

• Issue 2: Humans who design the algorithms used in AI tools may inadvertently build in their own unconscious biases, which could negatively impact a particular candidate group

⎻ 2a: Review of company’s existing resume data demonstrates its employees living in a particular zip code are the most successful and an algorithm could focus on candidates from that zip code

⎻ But what if the zip code’s population is 98% Caucasian?

⎻ 2b: A company may have historically promoted a certain group (i.e., males)

⎻ But those biases will be reflected in an evaluation of the company’s top performers used to create the algorithm evaluating new candidates

• Although neutral data points (zip codes) are used, it may be creating a disparate impact

• Certain personality testing processes may inappropriately weed out those with mental health disabilities but are otherwise qualified candidates


Precautionary Measures with Vendors

• Hirevue:

⎻ Algorithms are tested for bias and modifications are made for people with special needs

⎻ Algorithms are limited to target skills specific to each role, so applicants for analytics roles won’t be judged on their empathetic facial expressions like those applying for customer service roles

• Pymetrics:

⎻ Algorithms are tested against a candidate pool of about 50,000 people for whom it has demographic data

• RippleMatch:

⎻ Diversity is an optional preference to build into the target profile, but does not prevent matches/exclude candidates. If “important” for “Gender Diversity” is selected, female candidates will receive a slightly higher “fit score.”


Digital Hiring Recommendations

• Be informed consumers of AI vendors – do independent research and due diligence

• Avoid replacing discretion with algorithms wholesale – humans with subject matter expertise are a critical element of data scientific success

• Assign Legal and HR professionals to vet applications in conjunction with the use AI

• Test, test and re‐test to ensure no bias!

• Legal risk is VERY costly, and so reduce the risk by evaluating at 3 process points:

⎻ Review model building of algorithms

⎻ Review generation data to insure categories of individuals are not being excluded

⎻ Taking action on output

• Remember: Data is NEVER protected by attorney‐client privilege

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Blind Recruiting Systems

• “Blind” recruitment and screening practices remove personally identifiable information from applicant profiles, such as: name, gender, age, education, etc.

• “Blind hiring” is where you do not personally see or speak to an applicant before hiring them

• The goal is to eliminate, or at least reduce, the potential for unconscious bias, and promote diversity

• Challenges include:

⎻ Documenting the process

⎻ Customizing the process ‐ How “blind” should we go?

⎻ Is there a “back door”?


Digital Hiring: Accessibility Concerns

• ADA prohibits covered entities from discriminating against an individual with a disability with respect to job application procedures

• In shifting to an online‐only application process, employers must ensure applicants with disabilities are still given an equal opportunity to apply and offer reasonable accommodations for the application process

• Accommodations include:

⎻ Alternative text for images

⎻ Color contrast (for colorblindness)

⎻ Captions

⎻ Allow variance for timed content

⎻ Sound prompts


Accessibility Concerns: Vendor Solution

• Pymetrics notes that candidates may select an accommodated version which is modified for particular disabilities

⎻ Defining those who do not need accommodations: No accommodations are necessary for deafness or impairments to the lower body or non‐dominant hand

⎻ Outlining accommodations available: Accommodations are only available for color blindness and learning disabilities (Dyslexia, ADD/ADHD)

⎻ Outlining what to do if other accommodations needed: Candidates are encouraged to contact the appropriate recruitment officer to ask for an accommodation if they have a disability, including any sensory condition (i.e., blindness) or movement condition (i.e., muscular dystrophy)

⎻ Providing notice and opportunity to report perceived issues: A screen can also be added at the end of the games stating “If you believe you were negatively impacted in your performance on the games due to your disability you may request a reasonable accommodation.”

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Crowdsourcing:Wage and Hour Risks

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What is Crowdsourcing?

• Crowdsourcing is an internet‐based method of outsourcing. It includes taking a job traditionally performed by an employee or agent, and outsources it through cyberspace to an undefined, often large group of people in an open call.

• Workers often perform “cognitive piecework” – a set of particular tasks, performed and compensated within the online platform.

• These massive workplaces raise a key question:

⎻ Are crowdsourced workers employees or independent contractors?


Crowdsourcing Platforms

• On Amazon’s Mechanical Turk (“AMT”), companies hire workers to complete a series of Human Intelligence Tasks (“HITs”), easily fragmented activities in which computers require human assistance⎻ i.e., tagging photos according to their

content, transcribing audio, choosing representative screenshots for a short video clip, responding to survey questions, etc.

• On average:⎻ 200,000 workers on AMT at any one time

⎻ 20,000 to 100,000 HITs are available on AMT at any one time

⎻ 20,000 to 40,000+ new HITs posted each day

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Crowdsourcing Platforms

• Other crowdsourcing sites focus on more sophisticated work:

⎻ Rent‐A‐Coder: pool of software coders available for discrete and fairly straightforward coding projects

⎻ OnForce: pool of IT professionals

⎻ Upwork: pool of professional services such as administrative support and web development


Crowdsourcing Classification Has Legal Implications

• If crowdsourcing worker is an employee, company is an employer and has obligations under state and federal law (depending on size of employer)

⎻ Federal Laws:

⎻ Fair Labor Standards Act (“FLSA”)

⎻ National Labor Relations Act (“NLRA”)

⎻ Title VII, Family Medical Leave Act (“FMLA”) and

⎻ the Occupational Safety and Health Act (“OHSA”)

⎻ State Laws:

⎻ Missouri Minimum Wage Law (“MMWL”)

⎻ Illinois Wage Payment and Collection Act (“IWPCA”)


Crowdsourcing Classification Has Legal Implications

EMPLOYEE INDEPENDENT CONTRACTOR

Covered by federal and state employment and labor laws

Not covered

Application process, then verification of citizenship

Proposal for specific service or task, then contract with statement of work

Completes W‐4 and income is reported on W‐2

Completes W‐9; Income report >$600 on 1099

Payroll taxes withheld Payroll taxes not withheld

Unemployment insurance and workers’ compensation

No unemployment insurance; probably no workers’ compensation

Paid hourly or salary (Minimum wage and overtime pay)

Contract for work done

Regular pay periods Paid for invoice

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Crowdsourcing Classifications: Employee or Independent Contractor?

• IRS and National Labor Relations Act (“NLRA”) focus on “right to control”⎻ Employee: Employer has right to control details of work performance

⎻ Independent Contractor: Hired to undertake a specific project but left free to do the assigned work and chose how to perform the work; control is only as to ultimate result of the service

• Consider ‐What will be done and how it will be done?⎻ Manner, means by which services are performed

⎻ Behavioral control over worker

⎻ Time to complete work

⎻ Method of payment

⎻ Equipment furnished

⎻ Who regularly does this type of work? Employer? Contractor?



• Fair Labor Standards Act (“FLSA”): defines “employ” more broadly to include “to suffer or permit to work”

• This is critical to determining whether a worker is entitled to FLSA protections, i.e., minimum wage, overtime, break, and recordkeeping requirements

• Consider:⎻ Extent to which services rendered are integral part of the principal’s business

⎻ Permanency of the relationship

⎻ Amount of alleged contractor’s investment in facilities and equipment

⎻ Nature and degree of control by the principal

⎻ Alleged contractor’s opportunities for profit and loss

⎻ Amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor

⎻ Degree of independent business organization and operation



• Classification factors as applied to Crowdsourcing:

⎻ Work completed in cyberspace, not at a work site

⎻ Work may be assigned by task list, actively mediated, or automated by vendor

⎻ Firms may be small and rely entirely on outsourcing or medium and source specific projects/segments

⎻ Venders tend to set the ground rules regarding qualifications for work, supervision, payment, dispute resolution, access to platform

⎻ Conditions of access to vendor platform may be conditioned on a participation agreement

⎻ oDesk User Agreement: Provider’s relationship with Buyer will be that of an independent contractor, and nothing in this Agreement should be construed to create a partnership, joint venture, or employer‐employee relationship

⎻ Amazon’s Participation Agreement: Requires waiver of employee benefits, but states that repeated and frequent performance of Services by the same Provider may result in reclassification

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Crowdsourcing Wages

• Pay ranges

⎻ $1.25/hour for cognitive piecework on AMT

⎻ Routine “eyeball work” such as tagging photographs earns $0.01/HIT

⎻ Some tasks pay up to $4.00/task, but take longer and often require special skill and qualifications

⎻ oDesk reports hourly rate of $9.32 average

⎻ ($15/hr software developers; $10/hr designers/ consultants; $8/hr technical writers; $3/hr data entry)


Automated Background Checks, Use of Social Media,

and Biometrics:Privacy Risks

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Background Checks and the FCRA

• More employers are relying on third parties to perform background checks on applicants, which implicates the Fair Credit Reporting Act (“FCRA”)

• FCRA imposes requirements on employers who use “consumer reports” (background report) or “investigative consumer reports” (in‐depth reference check) prepared by a credit reporting agency (“CRA”)

• FCRA mandates a multi‐step process for use of background checks by CRA, and the penalties for failing to comply or provide necessary disclosures are significant

⎻ FCRA requires employers should provide written notice to the applicant of the use of the background check, notice of rights, obtain written authorization to complete the background check, and advise of the potential use of the report in an employment decision

⎻ There are more requirements under FCRA if company intends to take “adverse action” against an applicant or employee based on contents of the report (pre‐adverse notice and adverse notice)

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CRAs

• CRAs are not just traditional credit reporting bureaus

• The FTC has recently also found online data brokers and mobile application developers to be subject to the FCRA

• Intelligo: uses AI, machine learning, and text analytics to capture and analyze structured and unstructured data points from web sources, social media, data bases, legal records, etc., to produce a background report that identifies red flags


CRAs

Other Vendors

Sterling: RefLynk:


CRAs

• Not a CRA? i.e., BeenVerified

⎻ Offers data on social profiles, criminal records, public records

⎻ However, states that it is “not a consumer reporting agency” because “there are a number of restrictions in the way you can use “BeenVerified” including Employment Screening, specifically, that state that “You may not use BeenVerified when evaluating a person for employment reassignment, promotion, or retention”

⎻ BeenVerified recommends CRAs for Employment Verification, i.e., Sterling

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FCRA Application

• Does the FCRA Apply? Examples:

⎻ Internal recruiter for employer goes to Facebook and Instagram pages for an applicant and decides not to hire her/him because of offensive posts

⎻ The FCRA should not be triggered

⎻ It is important that the internal recruiter went directly to the separate sources of information without any third party compiling the information

⎻ External recruiter had an account to a website that compiled the same Facebook and Instagram pages for the applicant and the recruiter logged into an account to view the information

⎻ FCRA likely triggered


Social Media Platforms

• Social media has significantly changed the way companies are hiring

⎻ Recent surveys indicate that 93% of recruiters are using social media in recruiting efforts

⎻ 45% of the Fortune 500 firms include links to social media on their career page sections

• Social Media is an effective way to find & assess talent

⎻ Allows recruiting teams to take advantage of the candidate information being shared online

⎻ To engage candidates

⎻ Monitor their professional activities

⎻ Research their expertise

⎻ See what events they have attended

Source: https://www.jobvite.com/jobvite‐news‐and‐reports/2014‐social‐recruiting‐survey‐infographic/; https://beamery.com/blog/social‐recruiting‐strategy


Social Media Compliance Implications

• OFCCP Internet Applicant Rule⎻ OFCCP requires government contractors to record searches of resume databases and retain resumes of

individuals considered for a job

⎻ Are you creating Applicant pools?

⎻ Is system being used to “consider” job seekers?

⎻ Be consistent is whether social media profiles are considered

⎻ How are you tracking all this information & consideration?

• Stored Communications Act (“SCA”)⎻ Only public content is viewable by companies looking for new hires

⎻ Prohibits accessing electronic communications from other service providers (i.e., Gmail, Facebook)

⎻ Do not make a current employee who is friends with the potential new hire sign into their account to show you their private profile

⎻ Allows access to communications provided by employer (i.e., company email server)

⎻ Although this is private content, it is not subject to the SCA

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Searching and Record Keeping Obligations

External Searches

Position (req #) searched for

Search Criteria – Keyword StringsDate of searchResumes or profiles returned from

search that meet basic qualifications and are considered

Internal Searches

• Position (req #) searched for

• Search Criteria – Keyword Strings

• Date of search

• Resumes added to database (ATS) and date added


Social Media Compliance Implications

• Title VII: TMI (Too Much Information)

⎻ Example: Abdul applies for a job and his prospective employer looks up his name on Google. The employer discovers significant personal information about Abdul:

⎻ LinkedIn has his marital status

⎻ Facebook has his date and country of birth

⎻ Instagram has hundreds of pictures. One of the Instagram photos features Abdul wearing a black shirt with a symbol associated with a new religious group.

⎻ After viewing the image, the employer chooses not to hire Abdul.

⎻ Potential risk includes claims of discrimination

⎻ (age, religion, national origin, etc.)


Biometrics

Smart phone personal assistants

Wellness programs

smart phone applications

Global positioning

satellite (GPS) systems

Fingerprints, facial scans, brain waves, and palm reading

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Biometrics: Illinois Biometric Information Privacy Act (“BIPA”)

Image: Biometric privacy in the United States‐Biometric privacy laws in green ‐Failed biometric privacy bills in orange (Source: Bloomberg BNA Research)

• Biometric identifier:

⎻ Retina or iris

⎻ Fingerprint

⎻ Voiceprint

⎻ Hand or face geometry

• Biometric information:

⎻ “Any information, regardless of how it is captured, stored, or shared, based on an individual's biometric identifier used to identify an individual”

• Definition excludes:

⎻ Writing samples and signatures

⎻ Biological samples, organs, tissues and blood

⎻ Information collected in healthcare setting or collected/used for healthcare treatment


Biometrics: BIPA

• Employer must do the following before collecting any biometric identifiers:⎻ Provide written notice

⎻ Procure written consent

⎻ Develop written policy

⎻ Establish process to safeguard data

⎻ Reasonable standard of care

⎻ Cannot sell, lease, or profit from use of information

⎻ Cannot disclose unless:

⎻ Consent

⎻ Authorized financial transaction

⎻ Required by law

⎻ Authorized by warrant or subpoena

https://www.biometricupdate.com/201809/wendys‐faces‐potential‐class‐action‐suit‐under‐illinois‐biometric‐information‐privacy‐act


Biometrics: BIPA

• BIPA non‐compliance:⎻ Private right of action:

⎻ Since 2016, over 100 class action lawsuits have been filed by employees claimed to be “aggrieved persons” under BIPA

⎻ Main claims:

⎻ Failure to provide written notice explaining purpose of collecting and retention period for biometric data

⎻ Failure to obtain written consent to the data collection

⎻ Potential Damages:

⎻ $1,000 or actual damages for each alleged negligent violation; $5,000 or actual damages for intentional

⎻ Attorneys fees and costs

⎻ Injunctive relief

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Hot off the Press: Artificial Intelligence Video Review Act

• Illinois Legislature passed the Artificial Video Review Act (“AVRA”) on May 29, 2019, which will go into effect once signed by the governor.

• Illinois is the FIRST state to legislate use of AI in the employment context

• Requirements:⎻ Provide applicants written notice AI may be used to analyze applicant’s facial expressions and other

characteristics to evaluate fitness for the position

⎻ Provide each applicant written description of how AI works and what characteristics it is evaluating

⎻ Obtain written consent from applicant before they are required to provide the video interview

⎻ Once video interview is created, don’t share with others than those needed to evaluate the candidate

⎻ Video interview is to be destroyed 30 days after completion of hiring process for the position


Biometrics

• How to Avoid the Legal Risks:

• Develop written privacy policy and guidelines (with complaint procedure), update regularly, and provide training

• Implement documentation requirements (notice, consent, policy)

• Ensure proper restriction of biometric data collections and transfers – include Legal and HR

• Compliance obligations in provider agreements

• Arbitration agreements with class action waivers

• Implement schedule to adhere to destruction schedule

• Have a back‐up


Although AI potentially minimizes risks associated with human error and unconscious bias, human involvement must not be eliminated. Regularly reviewing your automated decision‐making programs, including the data being used, is necessary.

Recruiting in the Robot Age: Examining Potential EEO Implications and Optimizing Recruiting Through the Use of Artificial Intelligence, by Littler Attorneys Michael A. Chichester Jr. and Jacklyn R. Giffen

http://www.michbar.org/file/barjournal/article/documents/pdf4article3678.pdf

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This information provided by Littler is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any employment‐related dispute.

Although this information attempts to cover some major recent developments, it is not all‐inclusive, and the current status of any decision or principle of law should be verified by counsel.


This information provided by Littler is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any employment‐related dispute.

Although this information attempts to cover some major recent developments, it is not all‐inclusive, and the current status of any decision or principle of law should be verified by counsel.

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