Employment discrimination lawsuits can be relatively expensive for businesses. Claims of discrimination or retaliation can require months, if not years, to effectively resolve. Companies accused of discrimination may also have an uphill battle when seeking to hire workers in the future, as such allegations can turn up during a worker’s research into their employment options.
Even when companies have adopted policies prohibiting discrimination and promoting equal opportunities for workers, allegations of discrimination can still arise when workers can credibly claim that their protected characteristics affected their opportunities.
Some businesses have pivoted away from traditional hiring by using artificial intelligence (AI) to screen candidates. These efforts could theoretically reduce the risk of discrimination claims. However, AI is far from infallible. Workers might be able to assert that employers discriminated against them even though they used AI to screen candidates and manage other human resources issues.
New laws may impact litigation risk
Texas lawmakers recently adopted a new statute that seeks to regulate the use of AI in the employment sector. The Texas Responsible Artificial Intelligence Governance Act establishes standards for businesses and certain protections for employees.
The law takes effect on January 1st, 2026. The good news for employers is that the statute actually establishes a higher threshold for AI-related discrimination claims than similar statutes in other states. Some states, including Colorado, allow for litigation when employees can show that AI hiring practices disproportionately affected one group of workers.
Under the new Texas statute, workers alleging that they experience discrimination related to AI generally need to show that the discrimination was in some way intentional. That higher standard may make it easier for businesses to effectively respond to allegations that AI use during hiring deprived certain professionals of opportunities.
Early adopters of AI software for hiring and human resources purposes could potentially face litigation in the months before the law takes effect. These organizations may need to prepare an effective defense strategy that highlights the limitations of AI and the efforts the organization has made to adhere to all relevant employment statutes.
Finding appropriate responses to allegations of employment discrimination can help limit the lasting consequences such claims can have on a company’s finances and reputation. Employers may need help understanding changing statutes and responding appropriately to employment litigation brought by former or current employees.