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Artificial Intelligence in the Workplace: Legal Considerations and Best Practices for Employers

July 2, 2023

Workplace Policies & Human Rights

Artificial Intelligence in the Workplace: Legal Considerations and Best Practices for Employers

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Generative Artificial Intelligence (Generative AI) has revolutionized the way we perceive AI's capabilities. By leveraging large quantities of data and advanced algorithms, Generative AI, such as OpenAI's ChatGPT, has gained significant attention for its ability to create human-like content in various forms such as text, images, audio, and synthetic data. OpenAI's ChatGPT is a prime example of Generative AI, a highly advanced Chatbot introduced to the public in November 2022. Its exceptional ability to mimic human speech has significantly influenced perceptions of Generative AI and its potential applications. With its rapid adoption and diverse applications, employers face crucial decisions regarding the integration of Generative AI into their workplaces. This article explores the key issues employers need to consider when implementing AI and in the workplace.

The Paradigm Shift - Replacing Human Effort

Generative AI offers a tantalizing prospect for employers by providing a cost-effective and efficient alternative to certain job tasks traditionally performed by employees, vendors, and consultants. This technology offers the promise of enhanced organizational productivity, reducing both time and costs while maintaining or surpassing quality standards. However, as employers contemplate the replacement of human workers with AI systems, they must navigate a myriad of legal implications, especially in relation to job security and working conditions.

Depending on the industry and specific job roles, Generative AI may be employed to partially or entirely replace employees' responsibilities. In such cases, legal implications arise concerning job security and working conditions, which differ for unionized and non-unionized employees.

Non-Unionized Employees - Treading Carefully

If an employer decides to entirely replace employees with Generative AI, standard considerations related to termination will apply.

Replaced employees must receive their appropriate statutory, contractual, or common law entitlements. It is crucial for employers to make termination decisions in good faith, avoiding arbitrariness or discrimination. Particular care should be taken to prevent age-based discrimination, as assumptions about older employees' ability to adapt to Generative AI could be detrimental.

Employers must also be cautious of potential claims of constructive dismissal if the adoption of Generative AI significantly alters or reduces an employee's job duties. Proactively addressing this risk involves including explicit language in employment contracts that reserves the right to change duties and responsibilities, while limiting the magnitude of such changes through measures like providing advance notice or obtaining employee consent.

Additionally, the inclusion of provisions that maintain the contract's applicability despite changes to position, responsibilities, salary, or benefits can help avoid challenges based on the "changed substratum" doctrine, which invalidates contractual provisions when an employee's job substantially changes.

Unionized Employees – Navigating Collective Agreements

In the case of unionized employees, the doctrine of constructive dismissal does not typically apply. Consequently, unionized employers may exercise their management rights to modify bargaining unit employees' duties, subject to the language of the collective agreement and relevant statutes. However, employers may face restrictions when it comes to using non-bargaining unit employees or external personnel specially trained in Generative AI to perform tasks traditionally handled by bargaining unit employees. Such actions may be deemed outsourcing or contracting out, prohibited by collective bargaining agreements. Additionally, collective agreements often contain provisions requiring employers to consult with unions and provide notice before implementing technological changes that affect working conditions or employment security. Similar obligations may be imposed by labor statutes in some jurisdictions, even without collective agreement language. Compliance with these requirements depends on factors such as the definition of technological change, the impact of Generative AI on individual employees' conditions and security, and the employer's motivations for implementing the technology.

Data Privacy, Intellectual Property, and Confidentiality Considerations

While still in its early stages, Generative AI has already triggered privacy concerns, leading to investigations by privacy commissioners. Employers must tread carefully to safeguard confidential and sensitive information from inadvertent disclosures through Generative AI outputs. Robust privacy impact assessments and algorithmic impact assessments should be undertaken to address these concerns effectively.

On the other side of the spectrum, employers must be cautious not to infringe upon individuals' privacy rights or intellectual property when utilizing Generative AI-generated content. Collaborating with Generative AI developers and incorporating privacy-compliant practices is crucial to mitigate these risks.

Navigating Humam Rights and Biased Outputs

Generative AI's outputs may unwittingly perpetuate biases present in the training data, leading to potentially discriminatory outcomes. Employers must be vigilant, especially when using Generative AI for customer service, marketing, or employee performance evaluations. Employers can minimize liability by reviewing public-facing outputs and avoiding high-stakes decision-making tasks unless the AI's decision-making process is transparent and defensible.

Workplace Investigations - Guarding Against Deepfake Threats

Generative AI's capacity to create deepfake content raises concerns for workplace investigators. Employers must equip their investigators with training to detect and mitigate potential deepfake misuse during workplace investigations.

Cybersecurity Risks

Generative AI can be exploited by threat actors, leading to cybersecurity-related risks for organizations. Phishing attacks, malware creation, and social engineering attacks using deepfake technology are significant concerns. Employers should implement policies, protocols, and employee training programs to verify identities, enhance cybersecurity controls, and mitigate these risks.


Generative AI presents a new frontier for employers, revolutionizing workplaces while introducing complex challenges. By proactively addressing data privacy, intellectual property, confidentiality, human rights, workplace investigations, and cybersecurity concerns, employers can harness the potential of Generative AI while mitigating associated risks. Staying abreast of evolving regulations, adopting best practices, and prioritizing transparency and security will enable employers to navigate this transformative technology with confidence.

Note to Readers: This is not legal advice. If you are looking for legal advice in relation to a particular matter please contact one of our group members. We communicate all these updates to our clients and readers on our Employer Resources Portal and through monthly Newsletters.

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Chris Drinovz

Chris Drinovz is a Partner at KSW Lawyers and the founder and leader of the Employment & Labour Group. His calling is to excellence through the mastery of his craft and tireless dedication to his clients. He is described as hard-working, analytical, trustworthy, and genuine. Chris works with business leaders and union and non-union organizations to solve workplace legal problems and achieve long-term solutions that align with his client’s values. He is a dedicated advisor and an experienced courtroom advocate with a track record of success.

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