Working Together

In April 2025, my colleague Russ Anderson and I published an article discussing the potential risks associated with human resources (HR) departments using artificial intelligence (AI) to assist with the hiring process and to measure employee performance.  In that article, we touched on the developing body of laws dedicated to protecting employees and candidates from the effects of AI in the workplace.  Many of those laws aim to prevent algorithmic discrimination against employees or candidates, and some of them, such as the Colorado Artificial Intelligence Act (CAIA), require companies to use reasonable care to prevent algorithmic discrimination.  Since we published that article, the Trump administration announced three executive orders and an AI action plan that will likely alter existing and future AI regulation in the United States.

On July 23, 2025, the Trump administration released “America’s AI Action Plan” and President Trump signed three executive orders geared towards advancing the three core pillars outlined in that Action Plan: accelerating AI innovation, building American AI infrastructure, and leading in international AI diplomacy and security.  In accordance with those outlined goals, Executive Order 14179, a January 23, 2025 executive order referenced in the introduction of the Action Plan, calls for the revocation of “certain existing AI policies and directives that act as barriers to American AI innovation.”  And although the proposed 10-year moratorium on state and local AI regulations introduced in a draft of the “Big Beautiful Bill Act” earlier this year was not included in the final version of that bill, the July 23, 2025 Action Plan targets state-level AI regulations in a few notable ways. 

First, while stating that the federal government should not interfere with states’ rights to pass laws that are not “unduly restrictive to innovation,” the Action Plan declares that the federal government “should not allow AI-related Federal funding to be directed toward states with burdensome AI regulations.”  Relatedly, the Action Plan also directs the Office of Management and Budget (OMB) to work with federal agencies that have AI-related discretionary funding programs to ensure that those agencies consider a state’s AI regulatory climate when making funding decisions, and “limit funding if the state’s AI regulatory regimes may hinder the effectiveness of that funding or award.”  The Action Plan also directs the Federal Communications Commission (FCC) to “evaluate whether state AI regulations interfere with the agency’s ability to carry out its obligations and authorities under the Communications Act of 1934.”  Notably, the Action Plan also stresses the development of AI systems that are “free from ideological bias or engineered social agendas,” and recommends revising the framework developed by the National Institute of Standards and Technology (NIST) to eliminate references to Diversity, Equity, and Inclusion (DEI).    

As noted in our April 2025 article, Colorado’s CAIA created a presumption of reasonable care for an employer using AI in hiring that can demonstrate that it has established a risk management program consistent with recognized standards in the framework developed by NIST.  Therefore, revising the NIST framework to eliminate all references to DEI may change the acceptable risk management procedures under the framework, and thus, the acceptable risk management procedures for companies using that framework.  For example, one of the functions of AI risk management – as outlined in the NIST framework – is to ensure that “[w]orkforce diversity, equity, inclusion, and accessibility processes are prioritized in the mapping, measuring, and managing of AI risks throughout the lifecycle.”  If DEI is removed from the NIST’s framework, would companies no longer be required to ensure that workforce DEI is prioritized in the mapping, measuring, and managing of AI risks? Perhaps, but an alternative outcome is that states like Colorado could remove the soon-to-be-revised NIST as an acceptable framework and require companies using AI to make personnel decisions to adopt frameworks that require consideration of workforce diversity as part of their risk management procedures in order to be entitled to a presumption of reasonable care under the state’s AI law.  In that scenario, federal agencies might then limit or eliminate earmarked federal funding to such states as suggested in the Action Plan. 

As of today, it is too early to evaluate the impact of the July 23, 2025 Action Plan and corresponding executive orders on state and federal AI regulation.  However, employers using AI to assist in personnel decisions should continue to closely monitor developments in AI regulation, especially in the states where they operate or have employees, to ensure compliance with applicable federal and state law. 

If you want to learn more about the impact of the July 23, 2025 Action Plan and corresponding executive orders, or need guidance in drafting AI-related policies in employment handbooks, please contact any member of our Labor, Employment & Employee Benefits practice.