How companies, human resource departments are using A.I. when hiring

Yahoo Finance columnist Kerry Hannon breaks down how artificial intelligence is being used in hiring, coming laws to crack down on AI bias, and what job seekers should know about the tools.

Video Transcript

DAVE BRIGGS: It's well known that a human is not always the first one you see when [? resume ?] [? apply ?] to a new job. Often it's a computerized system that scans your resume for the relevant skills and qualifications. I don't know if everybody knows that.

Nearly one in four organizations use AI to support HR activities, according to the Society for Human Resource Management. Of those, nearly 8 in 10 use AI tools for hiring. Now those organizations are getting hit with some new laws they must comply with.

Yahoo Finance's Kerry Hannon has that story. Hi there, Kerry. What are we-- what are we hearing?

KERRY HANNON: Hey, Dave. Yeah, well, you know, it's been a bit of the Wild West out there in terms of regulations and restrictions on these AI tools that employers use in hiring. I mean, yeah, there's things like they can game the system for trying to get the right keywords, but there's some inherent bias that can be built into these for race and gender and all kinds of things.

So, you know, we haven't seen a lot of regulation out there to date, but in April in New York City, for the first time there's going to be a law that actually addresses this issue. And so what's going to happen there, it sort of generally looks at how most employers are using these AI tools, and it's going to really put it on the employer to be transparent to tell people, hey, this is what we're looking for the qualifications these, you know, AI tools are going to be scanning for. These are the characteristics, the job qualifications you need.

And if someone feels that it's not going to-- they're not able to be judged fairly in the system, they have the right to ask to try a different way. Now, that gets a little tricky. The whole thing is rather complicated, and it's going to be pretty messy as we move forward.

But so New York City, that's the first one. It was supposed to start in January, but employers are scrambling to figure out what do they need to do to find out and do these audits on their systems to see if there is bias that's happening? And we all can complain about it, but they are going to be the ones that will be responsible if there are lawsuits on discrimination.

SEANA SMITH: Certainly some changes coming there. Kerry, what are we hearing just about the rise in AI-aided video interviews? There's a little bit more talk about that. What can you tell us there and just some potential shortfalls you would also think we'll see?

KERRY HANNON: Exactly. I'm so glad you asked that. Now, this is something that the EEOC, you know, the US Equal Employment Opportunity Commission, put out some things-- some guidance on this, particularly for people with disabilities because, oh my gosh, this has become the rage now, that you're interviewed by sort of a chat bot on this automated-- you don't even have a person. There's no sort of-- it's really a bizarre experience. But what it does is people are judged on their speech patterns, the words they use, their facial muscles, all kinds of things that the AI can-- you know, the tool can judge you on.

Now if you have a disability-- say, for example, a speech impediment-- that can really come up to really haunt you in these sort of interviews, and you can be discarded because they use the way your-- the rhythm of your speech, the cadence to determine if you can make good decisions. So that is something that opens up a whole other can of worms, and I think we're going to see a lot more moving forward in that area as well.

SEANA SMITH: All right, great stuff. Kerry Hannon, thanks so much.