Last Updated on February 11, 2025

The human resources (HR) department plays a pivotal role in managing the workforce and ensuring that the organization complies with both federal and state regulations. While artificial intelligence (AI) offers valuable tools that can enhance efficiency and decision-making in HR, there are significant limitations when relying solely on AI, especially in the nuanced realm of regulatory compliance.

This article explores the importance of human cognitive processes in HR-related tasks and the deficiencies of AI systems, particularly in the context of applying regulatory standards, as well as the role of AI in HR and how we can expect it to continue to evolve over the coming years.

AI Evolving in Human Resources

The landscape of AI in Human Resources has shifted significantly following recent federal policy changes. In January 2025, President Trump issued an executive order titled “Removing Barriers to American Leadership in Artificial Intelligence (AI EO) with two goals in mind:

1. Implement the revocation of former President Joe Biden’s EO 14110, entitled the “Safe, Secure and Trustworthy Development and Use of Artificial Intelligence.“
2. Create an AI action plan to ensure that AI systems are “free from ideological bias or engineered social agendas.”

Subsequently, the Equal Employment Opportunity Commission (EEOC) removed its May 2023 AI-related guidance from its website, which addressed how existing federal anti-discrimination laws apply to employers’ use of AI in employment decisions. The Department of Labor (DOL) also pulled and/or updated a number of AI-related publications and documents from its website. This policy shift underscores the need for HR professionals to stay vigilant in applying existing anti-discrimination laws to AI tools, even in the absence of specific federal guidance.

The Growing Emphasis on AI Transparency and Explainability

One of the biggest shifts in 2025 is the increasing demand for AI transparency and explainability in HR decision-making. Employers and regulators alike now require AI systems to provide clear justifications for hiring, promotion and compliance-related decisions.

New regulations, such as the New York City Automated Employment Decision Tool (AEDT) law, prohibit employers from using an automated decision tool and require companies using AI in hiring to undergo annual bias audits and notify the candidates when AEDT tools are using in hiring, promotion and other employment considerations.

Organizations have begun shifting toward AI models that provide interpretable decision-making processes, allowing HR professionals to validate AI-driven conclusions and prevent unfair outcomes.

The Role of Human Cognition in HR

Understanding Nuance and Context

Human thought processes are inherently complex and capable of understanding subtleties and contextual cues that AI systems may overlook. In HR, professionals often face situations that require empathy, ethical judgment, and cultural understanding—areas where human cognition excels. For instance, handling sensitive issues such as workplace harassment or discrimination claims requires a deep understanding of individual circumstances, something that AI might misinterpret without human oversight.

Ethical Decision-Making

HR professionals are frequently called upon to make decisions that reflect the ethical standards of the organization. These decisions often involve gray areas that are not easily quantifiable by AI technologies. Human HR managers can weigh the moral implications of their decisions, taking into account the well-being of employees and the ethical posture of the organization.

Limitations of AI in HR

Lack of Emotional Intelligence

AI technologies, although proficient in processing vast amounts of data, lack emotional intelligence. When dealing with human issues, empathy and understanding are crucial. For example, an AI-driven approach might fail to capture the emotional distress of an employee undergoing personal challenges, leading to decisions that could exacerbate the situation.

Inadequacy in Handling Legal Complexity

Federal and state employment regulations are complex and constantly evolving. AI systems, although useful in identifying patterns and providing insights based on historical data, struggle with the dynamic and intricate nature of regulatory compliance. Human HR professionals are better equipped to interpret new regulations and apply them correctly to specific situations.

Risks of Bias and Discrimination

AI systems are only as unbiased as the data fed into them. Human oversight is necessary to identify and correct these biases, ensuring fair treatment of all employees.

An example of how bias and discrimination was noted in the case EEOC v iTutorGroup, Inc. On August 9, 2023, the EEOC announced a settlement in its inaugural lawsuit concerning discriminatory AI practices in hiring, EEOC v. iTutorGroup, Inc. The lawsuit alleged that iTutorGroup’s AI hiring software violated the Age Discrimination in Employment Act by automatically rejecting older job applicants. The settlement required iTutorGroup to pay $365,000 to affected applicants and revise its hiring practices, emphasizing the importance for employers to monitor and adapt to evolving legal standards and guidance on AI technologies in hiring.

Integrating AI with Human Expertise

Collaborative Approach

To maximize effectiveness, organizations should adopt a collaborative approach where AI tools are used to complement human skills rather than replace them. AI can handle routine tasks, such as sorting through applications or managing payroll, allowing HR professionals to focus on more complex and sensitive issues.

Continuous Monitoring and Adjustment

It is crucial to continuously monitor and adjust AI systems in HR. Regular audits by human professionals can ensure that AI decisions remain fair and comply with legal standards. This ongoing oversight helps mitigate risks associated with AI deficiencies.

Training and Development

Investing in training for both AI systems and human employees can enhance the collaborative efforts in HR. Training AI with updated, unbiased data and educating human employees on the latest AI technologies can foster a productive relationship between human intelligence and artificial systems.

AI and Data Security in HR

With the increasing reliance on AI in HR, data security has become a critical concern. In 2025, stricter data protection laws, particularly in California, are reshaping how businesses handle employee information. A new California law that took effect on January 1, 2025, now makes employment agreements unenforceable if they allow for the creation and use of a digital replica of an individual’s voice or likeness without their consent. Additionally, amendments to the California Consumer Privacy Act (CCPA) redefine “personal information” to include artificial intelligence systems capable of outputting personal data.

This means that HR departments using AI-powered analytics or biometric screening tools must now comply with expanded data privacy protections. Furthermore, companies must take extra precautions to prevent neural data leaks, as AI-driven HR tools collect vast amounts of sensitive employee information. Failure to secure this data properly can result in significant legal and financial repercussions, highlighting the importance of robust cybersecurity measures in AI-driven HR systems.

Balancing AI and Human Expertise in HR for Optimal Compliance and Fairness

While AI presents numerous opportunities for increasing efficiency within HR departments, it is not a substitute for human judgment, especially when dealing with complex legal and ethical issues. The thought processes of human HR professionals are crucial in interpreting the nuances of federal and state laws and ensuring that the organization adheres to these regulations while treating its employees fairly. To achieve the best outcomes, an integrated approach, where AI supports rather than supplants human expertise, is essential. This strategy not only enhances operational efficiency but also safeguards the organization against the potential pitfalls of relying solely on artificial intelligence.

Empowering Employers with MyHRConcierge: Integrating Human Insight and AI in HR

MyHRConcierge specializes in helping employers navigate the complex legal and ethical dimensions of human resources. Through its broad suite of services, MyHRConcierge emphasizes the crucial role of human insight in interpreting and applying workplace laws. MyHRConcierge’s SHRM-certified HR professionals help employers bridge the gap between their use of AI tools and those areas requiring moral judgment and emotional intelligence. This balanced approach allows the employer to provide a comprehensive HR management solution that is both technologically advanced and deeply attuned to the human aspects of workplace management.

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