DOL ISSUES GUIDANCE ON RISK IN USING AI IN THE WORKPLACE

BY JERRY L. PIGSLEY | WOODS AITKEN LLP

The U.S. Department of Labor (DOL) recently issued guidance to Wage and Hour Division field staff regarding the application of the Fair Labor Standards Act (FLSA) and other federal labor standards to employers’ use of artificial intelligence (AI) in the workplace.

Executive Order

In October 2023, President Biden issued Executive Order 14110 requiring the Secretary of Labor to issue guidance to make clear that employers that deploy AI to monitor or augment employees’ work must continue to comply with protections that workers are compensated for their hours worked, as defined under the FLSA and other legal requirements.

FLSA

DOL recognized some AI and employee monitoring tools have the ability to measure and analyze metrics of worker productivity or activity. However, DOL in its guidance found reliance on automated timekeeping and monitoring systems without proper human oversight may create potential compliance challenges with respect to determining hours worked for purposes of federal wage and hour laws.

Tracking Work And Break Time

DOL noted employers may use timekeeping systems which incorporate AI to make predictions and to auto-populate time entries based on a combination of prior time entries, regularly scheduled shift times and break times, business rules, and other data. However, DOL warned use of these “smart” entries does not relieve an employer of the obligation to ensure that records are accurate and that an employee is paid for all hours worked. DOL gave the example of an employee usually taking a 30-minute unpaid meal break but skips the break on a particular day due to their workload. If the system automatically deducts the break from the employee’s work hours based on the employee’s past time entries, it would result in the employer failing to properly record and pay the employee’s hours worked.

GPS Technology

DOL cited to employers using GPS technology to determine a worker’s location relative to a job site. Then based on location, the automated system recorded what it determines to be the employee’s “work hours” as they enter and leave the job site. If the system records only the time the worker spent at the work site as compensable hours of work it may fail to account for travel time between work sites or hours worked at other locations and may result in minimum wage or overtime pay violations.

Wage Rates

DOL recognized some AI systems use automated algorithms to independently calculate and determine workers’ rates of pay based on a variety of data and metrics collected by systems. Employers using such systems must exercise proper human oversight to ensure employees are paid the applicable minimum wage and accurately calculate and pay an employee’s regular rate and overtime premium.

FMLA

DOL noted AI is sometimes used to process FMLA leave requests, track time off, and integrate absence calendars. However, without responsible human oversight, employers relying on AI to process leave requests, including determining eligibility, calculating available leave entitlements, or evaluating when a leave is for a qualifying reason, can create potential compliance challenges. DOL warned that employers should not use AI to take adverse action against employees based on the use of FMLA leave.

Takeaways

AI has potential to help INEDA members improve compliance with the laws. The key is proper human supervision to ensure the use of AI complies with the labor standards that the DOL enforces.

Editor’s Note: This article is not intended to provide legal advice to our readers. Rather, this article is intended to alert our readers to new and developing issues and to provide some common sense answers to complex legal questions. Readers are urged to consult their own legal counsel or the author of this article if the reader wishes to obtain a specific legal opinion regarding how these legal standards may apply to their particular circumstances. The author of this article, Jerry L. Pigsley, can be contacted at (402) 4378500, jpigsley@woodsaitken.com, or at Woods Aitken LLP, 301 S. 13th Street, Suite 500, Lincoln, NE 68508-2578.

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Editor’s Note: This article is not intended to provide legal advice to our readers. Rather, this article is intended to alert our readers to new and developing issues and to provide some common sense answers to complex legal questions. Readers are urged to consult their own legal counsel or the author of this article if the reader wishes to obtain a specific legal opinion regarding how these legal standards may apply to their particular circumstances. The author of this article, Jerry L. Pigsley, can be contacted at (402) 4378500, jpigsley@woodsaitken.com, or at Woods Aitken LLP, 301 S. 13th Street, Suite 500, Lincoln, NE 68508-2578.