AI in Employment Decisions

Short Answer

The employer remains responsible for its hiring and employment decisions when an AI tool helps make them, including a tool a vendor built and runs. Title VII, the ADA, the ADEA and Texas Labor Code chapter 21 apply; disparate impact claims remain available to private plaintiffs under Title VII. The EEOC continues to display AI employment resources, including its ADA-and-AI page. Executive Order 14281, issued April 23, 2025, directs federal agencies to deprioritize disparate-impact enforcement but does not amend Title VII. TRAIGA adds a narrow prohibition on AI developed or deployed with intent to discriminate and states that disparate impact alone does not show that intent; it does not reduce employers’ exposure under the employment statutes. Tools that analyze faces or voices can capture biometric identifiers that require consent under Texas law. Vendors that compile and score applicant data may be consumer reporting agencies under the FCRA. Employers hiring outside Texas face stricter state and city rules.

Which Laws Apply

Texas AI-specific: Business and Commerce Code § 552.056.

Generally applicable Texas law: Labor Code chapter 21; Business and Commerce Code § 503.001 (biometric identifiers).

Federal: Title VII, 42 U.S.C. § 2000e-2(a) and (k); ADA, 42 U.S.C. § 12112; ADEA; FCRA; Uniform Guidelines on Employee Selection Procedures, 29 C.F.R. part 1607.

Liability for Vendor Tools

Mobley v. Workday illustrates claims against a hiring-tool vendor as an alleged employer agent. The May 16, 2025 order granted preliminary certification of an ADEA collective. Later motion rulings address specified claims, not a finding that the tool discriminated. Certification is procedural and is not a nationwide merits rule. A Texas employer should analyze its own selection practice and legal duties, with testing, accommodation and vendor-cooperation terms appropriate to the actual use.

Disparate Impact After 2025

Executive Order 14281, issued April 23, 2025, directs changes in federal disparate-impact enforcement priorities. It does not amend Title VII, 42 U.S.C. § 2000e-2(k), or Texas Labor Code § 21.122, which addresses disparate impact. The EEOC continues to display AI employment resources, including its ADA-and-AI page. A statistical screen such as the Uniform Guidelines’ four-fifths measure is a starting point, not a legal safe harbor or proof of discrimination by itself. Check statistical significance, job relevance, the applicable statute and available alternatives.

TRAIGA’s Discrimination Section

TRAIGA Business and Commerce Code § 552.056 prohibits AI development or deployment with intent to unlawfully discriminate; disparate impact alone does not demonstrate that intent. It does not displace employment law’s different tests. The consumer definition excludes employment contexts, which matters for consumer-specific disclosure and portal provisions. The discrimination prohibition is phrased as a restriction on a person’s development or deployment, not a consumer-only hiring exemption.

Disability and Accommodation

AI assessments can screen out applicants with disabilities, for example through timed games, speech analysis or video analysis. The ADA prohibits selection criteria that screen out people with disabilities unless job-related and consistent with business necessity, and requires reasonable accommodation, which may mean an alternative to the AI assessment.

Biometrics in Hiring Tools

Video interview tools that analyze facial geometry, and voice tools that create voiceprints, may capture biometric identifiers under Texas law, which requires notice and consent before capture for a commercial purpose, limits disclosure and requires destruction within a year after the purpose ends (Business and Commerce Code § 503.001). HB 149’s exemption for AI training does not cover systems that identify specific individuals.

Background and Scoring Vendors

A vendor assembling applicant information and supplying a covered consumer report can trigger FCRA duties. The employer then needs the applicable disclosure, authorization, pre-adverse-action and final-notice process. Coverage depends on the vendor’s function and use of the information; an AI score is not automatically outside the statute.

Hiring Outside Texas

Illinois, New York City, Colorado and California have distinct employment, ADMT or privacy provisions relevant to covered uses. Notice, audits and other duties differ. Other States and the EU identifies the selected rules and dates; geographic presence alone is not the complete coverage test.

Illustrative Example (Hypothetical)

A Texas retailer with 400 employees adopts a video interview tool that scores candidates’ communication skills. It should run an adverse impact analysis by sex, race and age before use, offer an alternative for applicants who need accommodation, obtain consent if the tool captures facial geometry, confirm whether the vendor is a consumer reporting agency, and, for stores in Illinois, give the notices Illinois requires.

What Is Unsettled

Whether vendors can be directly liable as agents under Texas law; how courts will treat AI scoring vendors under the FCRA; whether Texas will adopt AI-specific employment rules in 2027.