As artificial intelligence (AI) continues to develop, its integration into daily life is becoming increasingly pervasive. The workplace is no different. AI has the potential to streamline and automate laborious workplace tasks, such as timekeeping and productivity monitoring, making it an attractive tool for employers. Like for any tool, it is important that employers maintain awareness of how to use AI responsibly and in accordance with applicable law.

Background

In late 2023, President Joe Biden issued an “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.” On April 29, 2024, in response to the call for action under that order, the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin (FAB) regarding the application of the Fair Labor Standards Act and other federal labor standards when using AI in the workplace.

FLSA compliance

The Fair Labor Standards Act (FLSA) establishes standards for minimum wage, overtime pay, and recordkeeping for government and private-sector employees. Under the FLSA, employees must be properly compensated for “hours worked.” Regulations and additional guidance have characterized “hours worked” to include not only time spent actively working, but also certain time spent waiting or on short breaks. The DOL emphasizes that time spent working “must be paid regardless of the level of productivity or performance of the employee.”

Where employers adopt AI tools to measure or analyze worker activity, the results may cause an inadvertent violation of the statute by miscalculating an employee’s “hours worked.” For example, “bossware,” a term coined to describe software that tracks employees’ movements to determine activity, may unlawfully discount certain periods of time when employees are not actively using their devices. Other AI tools used to determine employees’ locations or automate work schedules could also create a risk of failing to account for work conducted at secondary locations. Similarly, an AI timekeeping system that replaces a typical time clock might automatically deduct certain allotted break or meal periods without confirming that the employee has been relieved of their work-related duties during that time.

Employers are not relieved of the responsibility to ensure employees are compensated for all hours worked, and that accurate time records are maintained when AI tools are implemented in the workplace. To reap the benefits of these AI systems without risking a potential FLSA violation, employers should consider implementing human oversight procedures. Such procedures should ensure that the “hours worked” determined by the automated system match the employee’s actual “hours worked” as defined by the FLSA: all time engaged, or waiting to be engaged, in work for the employer must be compensated.

FMLA compliance

In addition to the potential miscalculation of hours worked, AI tools can create compliance issues related to the administration of the federal Family and Medical Leave Act (FMLA), including determining an employee’s eligibility, calculating and tracking available leave, and determining whether the requested leave is for a qualifying reason. An employee’s eligibility under FMLA is determined, in part, by calculating the amount of time the employee has worked for the employer. Specifically, to be eligible for leave under FMLA, employees must be employed by a covered employer for at least 12 months and have worked at least 1,250 hours in the 12 months immediately preceding their leave. An employer that uses AI for timekeeping and leave administration could encounter compliance issues when determining an employee’s eligibility under FMLA if an employee’s hours worked were miscalculated.

Additionally, once an employee is determined to be eligible for FMLA leave for a particular qualifying reason, an employer may not reconsider the employee’s eligibility as to that reason for a period of 12 months, absent limited circumstances. Where an AI tool is automatically considering eligibility without reference to this 12-month period, the employer may be liable for violating this restriction.

Further, AI systems may present risks of unlawful interference or retaliation when those systems are leveraged to track leave use and consider such data as a negative factor in determining employment actions or providing benefits. For example, if an employer’s automated leave tracking system applies attendance points to FMLA-protected absences, and an employee is subsequently disciplined or denied benefits that other employees receive due to the accumulation of attendance points, a court may consider the employer to have interfered with and retaliated against the employee for taking protected FMLA leave.

As with AI and the FLSA, to avoid these possible FMLA violations, employers should ensure responsible human oversight of any AI systems they choose to implement.

Takeaways

AI can do many useful things, but it can also create challenges for employers regarding compliance with state and federal labor standards. Where employers choose to use AI as a tool for streamlining certain practices, they should be sure to have a system in place to maintain compliance with applicable employment laws.

Becky Zuschlag is an attorney with Barran Liebman. She advises and represents employers on a wide range of workplace issues.

Lex Shvartsmann is a law clerk with Barran Liebman. She partners with attorneys in client trainings, legal research, and drafts of employment policies and handbooks.