Employment Law Report
Regulation of Artificial Intelligence – What’s Next for Employers?
Generative Artificial Intelligence (“A.I.”) models such as OpenAI’s ChatGPT, XAI’s Grok, and Google’s Gemini have taken the world by storm over the last few years. 2025 was perhaps the most notable year in terms of A.I.’s proliferation across the economic sector. Claims that businesses or products are “A.I.-integrated” or whose growth or production was enabled or accelerated by A.I. are now more prominent than ever before. Employers across all fields have reported feeling pressure to adapt to the new A.I.-fueled market or risk being left behind. However, with few exceptions, many states have failed to create laws or regulations that govern the limits of A.I.’s use in commerce. As the capabilities of A.I. models have increased, so too have the news stories about discriminatory practices in hiring perpetuated by A.I. or, even more tragically, high-profile lawsuits alleging that A.I. assisted a teenager in committing suicide.
In response, some states have already enacted regulations concerning A.I. use. Utah, for example, enacted legislation requiring businesses to disclose to consumers when A.I. was utilized in the context of a consumer transaction. Starting in early 2026, a number of other states will follow suit in implementing the first real restrictions and regulations on A.I. use. California, Colorado, and Texas have all enacted legislation that places restrictions on A.I.’s collection of data, utilization, and implementation in certain contexts.
Despite multiple states indicating that they intend to further regulate A.I., President Trump signed an Executive Order on December 11, 2025, titled “ENSURING A NATIONAL POLICY FRAMEWORK FOR ARTIFICIAL INTELLIGENCE.” Substantively, the Executive Order states that the current administration intends to allow A.I. companies to “be free to innovate without cumbersome regulation” and remove the “patchwork” state-by-state A.I. regulations currently in place. The Executive Order also creates an “A.I. Litigation Task Force” charged with challenging state laws that restrict A.I. beyond the Executive Order’s “minimally burdensome” standard and threatens revocation of federal funding to states who refuse to comply.
What does this mean for Employers?
Unfortunately, the conflict between state legislatures and the policies of the current administration have left employers without much guidance on what exactly the regulations on A.I. are, or what they are going to be. Beyond loose guidance from federal agencies and enforcement bodies, there simply is not much for employers to look for answers. For now, Employers should continue to utilize A.I. cautiously and maintain documented human oversight to prevent bias and other issues. Employers seeking specific advice on how to remain in compliance with specific state laws or regulations or seeking advice on best A.I. practices in the employment context, please contact a member of the Labor & Employment team at Wyatt Tarrant & Combs.
