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According to a recent report by Harvard Business Review Analytic Services and Fiverr International Ltd., freelancers constitute around 20% of work done by organizations in the US. Despite their significant contribution to output, the study reveals that most businesses lack a strategic approach towards utilizing freelance talent. Micha Kaufman, the CEO of Fiverr, emphasized the growing trend of businesses leveraging freelance talent and expressed his expectation for this trend to continue.
The report also highlights some key findings. It indicates that 49% of respondents consider finding freelancers with the right skills as the top challenge for organizations considering hiring freelancers. Additionally, 64% of respondents acknowledged employing freelance workers in various roles within their organization. Moreover, 51% of respondents expressed their belief that their organizations will increase their use of freelance workers in the future.
The benefits of utilizing freelancers were also highlighted in the report. These include greater flexibility and agility in staffing, reduced need for office space, and the ability to quickly access new skills.
The survey collected responses from 514 individuals in the US who were familiar with their organization's utilization of freelance workers.
The use of artificial intelligence (AI) in HR procedures is becoming increasingly common, revolutionizing how businesses interact with job applicants and employees. Companies are implementing AI technologies such as résumé-screening software, chatbots, video interviewing software, and data analysis algorithms for hiring, evaluation, promotion, and termination decisions. These AI programs aim to streamline processes, match candidates with appropriate roles, reduce bias in employment decisions, and promote diversity and inclusion.
However, the use of AI in HR decision-making comes with potential risks. The Equal Employment Opportunity Commission (EEOC), the federal agency responsible for enforcing anti-discrimination laws, is closely examining the use of AI in HR processes. The EEOC's Artificial Intelligence and Algorithmic Fairness Initiative has released a technical assistance document titled "Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964". This document, along with previous guidance on AI and the Americans with Disabilities Act, highlights important considerations for employers when expanding the use of AI in HR decision-making.
The key message from the EEOC's technical assistance is a warning to employers: the use of AI technologies in HR processes could lead to adverse impact that violates federal anti-discrimination laws. Discrimination can occur through disparate treatment, where individuals are treated differently based on their membership in a protected class, and disparate impact, which refers to a neutral policy or procedure that unintentionally discriminates against a protected group. Importantly, adverse impact can occur even if the software used is administered by a third party.
To evaluate whether a policy or practice creates an adverse impact, the EEOC examines whether the selection rate for one group is "substantially" different from the selection rate for another. One commonly used guideline is the "4/5ths rule," which considers whether the selection rate for a protected class is less than 4/5ths of the rate for another group. The EEOC provides an example to illustrate the application of the 4/5ths rule in an employment decision.
While passing the 4/5ths rule may indicate no adverse impact, it does not guarantee that the practice is not discriminatory. Applicants or employees can still challenge AI-based HR processes on grounds of discrimination or adverse impact. For instance, a chatbot that excludes individuals with employment history gaps could disproportionately affect individuals with disabilities who have not self-identified as such.
If the 4/5ths rule suggests a potential adverse impact, it prompts further inquiry. A policy or practice with an adverse impact on a protected class may not violate the law if it is job-related, consistent with business necessity, and no less discriminatory alternative is available.
In light of the EEOC's guidance, employers utilizing AI in HR decision-making should monitor their AI-based procedures for potential adverse impact under the 4/5ths rule. Regular reviews, both during implementation and periodically, are essential. Engaging legal counsel for a privileged review can help identify potential legal risks. Regardless of the 4/5ths rule outcome, employers should ensure that selection procedures are job-related and consistent with business necessity.
By emphasizing AI as a top priority, the EEOC underscores the need for businesses to use this technology to comply with federal anti-discrimination laws. Taking proactive steps now ensures that processes are in line with legal requirements and ethical decision-making.