The importance of data privacy laws in the United States and the European Union (EU) are rapidly growing and their impact on organizations’ use of AI-based decision-making tools.
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- Regulatory Landscape: Data privacy laws in both the United States and the EU are evolving, requiring businesses to ensure compliance with regulations that affect the handling of personal data, particularly in the context of AI-driven decision-making.
- Specific Regulations: In New York, Local Law 144 regulates the use of automated employment decision tools, while in California, the Consumer Privacy Act (CCPA), amended by the California Privacy Rights Act (CPRA), extends data privacy protection to job applicants, current employees, independent contractors, and business dealings.
- Ethical Responsibility: Organizations are encouraged to go beyond mere compliance and embrace ethical responsibility. The CPRA explicitly addresses profiling and the use of AI in employment screening tools. Transparency, clarity, and consent regarding AI usage are emphasized.
- Data Organization: To comply with these laws, companies must maintain clean and organized data that is readily accessible to employees upon request. Understanding the data’s lifecycle and ensuring complete, comprehensive records are vital.
- AI Model Challenges: Data privacy laws make it more challenging to leverage data for AI models. AI requires large datasets, and potential gaps or biases in data can lead to skewed models. Compliance requirements may also be unclear, adding complexity and costs.
- Awareness Gap: There is a general lack of awareness about these new data privacy laws, especially among smaller organizations that may not have robust compliance programs. Gig companies face particular challenges in managing privacy across numerous contractors.
- Privacy Focus: The new regulations shift the focus from industry-specific frameworks to individual privacy. Security and governance, risk management, and compliance (GRC) engineers should align security practices with data protection requirements.
- Getting Ready for Compliance: While enforcement has been delayed in some cases, businesses should proactively prepare for compliance with data privacy laws. Expert consultants can assist in readiness, considering the potential impact across states and sectors.
- Global Impact: California often leads in US privacy laws, which can influence other jurisdictions. Similar laws and regulations may emerge in other states and cities, affecting businesses nationwide.
- Rights of Individuals: These laws grant individuals new rights over automated decision-making, including notification, transparency, opt-out, and correction rights. Organizations need to be prepared to address these rights.