In January of 2025, the New Jersey Office of the Attorney General and the New Jersey Division on Civil Rights (DCR) issued official state regulatory guidance regarding artificial intelligence (AI) and related technologies and the state’s Law Against Discrimination (LAD) (Guidance on Algorithmic Discrimination and the New Jersey Law Against Discrimination). Here, our New Jersey employment lawyer provides an overview of key things to know about the regulatory guidance.
Background: More Companies Considering AI-Driven Technology for Hiring Decisions
As artificial intelligence (AI) and other algorithmically-based technology continues to advance, more companies are turning to AI-driven tools for employment matters, including for recruitment and hiring. AI can help to analyze resumes, assess candidate skills, and even predict job performance based on historical data. Some people feel that this will be a good thing for both employers and employees. Indeed, proponents argue that AI reduces hiring biases and allows companies to identify the best talent more effectively. On the other hand, critics caution against over-reliance, citing potential issues with algorithmic bias and a lack of transparency in decision-making processes.
New Jersey has Not Enacted a Specific AI Bias Law (Employment)
Some jurisdictions have already enacted AI-specific bias laws for employment matters. For example, New York State passed a law regulating the use of AI for hiring and other employment decisions. However, as of early 2025, New Jersey has not passed a similar law. Notably, it may pass such a law in the future. Two bills were introduced in 2024 focused on regulating the use of AI in hiring processes. Assembly Bill 3854 would require “automated employment decision tools” to undergo annual bias audits, while Assembly Bill 3911 focuses on AI analysis of video interviews, mandating transparency and data reporting. Neither have been passed into law.
An Overview of New Jersey Guidance On AI and the LAD
Although New Jersey has not enacted a specific AI bias law for employment, the New Jersey Office of the Attorney General and the New Jersey Division on Civil Rights have now released comprehensive regulatory guidance on the issue. The guidance is focused on AI-based technology and the Law Against Discrimination. Employers and workers should have a general understanding of the regulatory guidance on AI and employment law. Here are key points to know:
- Scope of the Regulatory Guidance: The guidance clarifies that the LAD’s anti-discrimination provisions apply to decisions made by AI and other automated tools. Companies that rely on these tools can be liable for discrimination even if there is no intent to discriminate and even if the tools were developed by third parties.
- Types of Discrimination Covered By Guidance: The regulatory guidance addresses both “disparate treatment” and “disparate impact” discrimination. It is important to emphasize that it highlights that unintentional discrimination can occur if tools are not carefully designed and carefully tested. It cautions employers to beware of the risk.
- Employer Responsibility for Compliance: The guidance states that all entities using these technologies (AI tools) are responsible for ensuring that their implementation does not result in discriminatory outcomes. They should be prepared to ensure that there is rigorous testing and evaluation of the tools for potential bias. An employer is responsible for the tools that it uses—even if a third party developed those tools.
Can an Employer in New Jersey Be Held Liable for Discrimination if AI Made the Decision?
The answer is “yes.” The regulatory guidance makes it very clear that the New Jersey Office of the Attorney General and the New Jersey Division on Civil Rights have interpreted the state’s LAD in a manner that holds employers liable for discriminatory hiring/employment practices even if the bias is driven by artificial intelligence. Employers are responsible for the outcomes of their employment practices—regardless of the tools used. Among other things, this includes decisions made by AI in hiring, promotions, terminations, and other employment actions. If an AI system’s algorithm results in discriminatory effects based on race, gender, age, or other protected characteristics, the employer could face legal consequences. That an employer relied on AI is not a defense against liability.
Contact Our New Jersey Employment Lawyer for a Fully Confidential Consultation
Charles Z. Schalk is a New Jersey employment attorney with the skills and experience to protect the rights of clients. If you have any questions about AI-related hiring discrimination, we are here to help. Give us a phone call at (908) 526-0707 or contact us online to arrange your completely confidential, no obligation initial consultation. We represent employees throughout New Jersey.