US OFCCP Puts Federal Contractors and HR Tech Providers on Notice – Signaling a Shift Towards Responsible AI
The US Office of Federal Contract Compliance Programs (OFCCP) has released its crucial initial guidance regarding the use of Artificial Intelligence by federal contractors in hiring and employment. This significant […]

The US Office of Federal Contract Compliance Programs (OFCCP) has released its crucial initial guidance regarding the use of Artificial Intelligence by federal contractors in hiring and employment. This significant document, titled “Artificial Intelligence and Equal Employment Opportunity for Federal Contractors,” was posted in April 2024. It’s a comprehensive guide addressing AI in the Equal Employment Opportunity (EEO) context, and it’s not to be overlooked. The guide addresses obligations enforced by OFCCP and applies to both federal contractors and subcontractors, collectively referred to as federal contractors. It’s part of the Secretary of Labor’s responsibility under Executive Order 14110, issued by President Biden in October 2023.

This guidance is not set in stone, but will evolve over time, in tandem with the rapid expansion of AI use in HR. It’s a dynamic document that will adapt to the changing landscape of AI. Based on our review, there are some potential impacts for employers, HR technology vendors, and HR service providers using AI. However, with the right approach and understanding, these impacts can be managed effectively.

Employers that are federal contractors or subcontractors should expect the following:

  • Increased scrutiny on AI systems in employment decisions.
  • The requirement to ensure transparency and fairness in AI use.
  • Emphasis on employee engagement and inclusivity in AI deployment.
  • To bear responsibility for the algorithm, methods, and procedures their HR technology uses.

HR Technology Vendors should expect:

  • Demand for AI systems aligning with EEO principles.
  • There is a need for transparency and documentation in AI development, including algorithms used in employment functions.
  • Emphasis on accessibility and disability inclusion in AI interfaces.

HR Service Providers Using AI:

  • The requirement to validate AI systems for fairness and legality.
  • Responsibility for ensuring AI systems accommodate disabilities.
  • Importance of transparency and engagement in AI governance.

Anyone even vaguely familiar with OFCCP guidelines will recognize most of the guidance as an update of previous requirements into the “AI age.” Our first review of the guidance with several modern Work Tech providers using AI in the hiring process was encouraging. Most have transparently published their algorithms, have existing independent audits in place, and believe that they have the technical capabilities to passively track all of the “micro-decisions” made by their AI. 

We know this is only the case for some Work Tech/HR Tech providers. Some of the AI on the market is more of a “black box” scenario. Employers will be less comfortable with this approach moving forward, and we’ll likely see some technology changes due to providers needing to comply with employers’ standards.

Caution Ahead

The guidance is well written. In relatively short order, it provides initial definitions for AI, algorithms, automated systems in employment, EEO compliance obligations, bias and discrimination risks, promising practices for federal contractors’ use of AI in employment, and many additional resources. One statement in the promising practices section stood out to us in the context of implications for federal contractors and HR technology vendors: “Federal contractors should not rely solely on AI and automated systems to make employment decisions and ensure there is meaningful human oversight of any such decisions supported by AI.” This statement seems to advocate for humans in the loop for all stages of employment decisions and most certainly alludes to having “rails” in place to narrow the decisions AI makes without human review.

“Federal contractors should not rely solely on AI and automated systems to make employment decisions and ensure there is meaningful human oversight of any such decisions supported by AI.”

US OFFCP, “”Artificial Intelligence and Equal Employment Opportunity for Federal Contractors”

Looking back to the processes used by employers via legacy SaaS and on-premise systems, for the most part, the searches, selection criteria, selection of internal or external candidates, and other employment decisions were driven by transactions created by the employer user, whether created in advance or ad hoc during a process. While these “filters” may be automated, they were saved defacto, defined, and explainable based on the employer’s process. Many modern AI-driven systems leverage machine learning and Large Language Models to establish similar “filters” passively without any user prompt. The result could represent a significant challenge for employers and HR Tech vendors. Time will tell, and we’re still learning. 

Opportunity Abounds

Guidance from the OFCCP is good. It gives us clear parameters within which to work. Most advisory clients look forward to analyzing this guidance and partnering with their customers to optimize compliance. We feel the same way. There is an incredible opportunity for tech providers to establish a leadership position and differentiate while doing the right thing for employers and candidates. We’ve partnered with AKERS Advisors, one of our WorkTech Advisory Network partners, and another leading Work Tech advisory team led by Josh Akers, one of the industry’s sole compliance specialists in working with talent tech providers. 

We’re teaming up to help tech providers of all stages and in every HR and Work Tech category interpret the ongoing guidance from the OFCCP as it relates to tech and products and establish clear, differentiated strategies and messaging around this critical guidance for the enterprise HR technology market. 

To get help evaluating the ongoing new guidance and an OFCCP Health Check for your HR Tech, request a call with WorkTech and AKERS Advisors, here.

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