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In this week's show, we take a look at the legal implications of an intriguing trend in the field of human resources: the use of big data and people analytics. These tools can assist employers in analyzing large data sets to help with hiring, recruiting, measuring productivity, evaluating fitness for promotion, and more. Frank Morris, from Epstein Becker Green, has seen data analytics emerge as an increasingly important area of his practice:
"Businesses are using people analytics today to get away from what they've done in the past—just using headhunters, posting to job boards, seeking resumes, putting ads both online and in hard copy papers—to get a broader net, and to get a broader net of folks brought in who are going to be able to do the work that now needs to be done in an increasingly tight labor market, and to be diverse and inclusive at the same time. So, it really marks a change in the way the net is being cast, as well as some of the indicia that are supposedly being tested through the use of people analytics.”
The opportunity to increase efficiency, reduce costs, and improve decision-making is huge. The vast majority of U.S. employers consider people analytics important, and investors see the market potential. In recent years, billions of dollars have been invested in backing companies making applications that use this technology. But Deloitte’s HR Consulting branch reports that, as of early 2016, only 8 percent of companies were actually using predictive analytics. One reason that employers have been slow to deploy the technology is that it carries its own risks of legal exposure. Nathaniel Glasser, from Epstein Becker Green, recently collaborated with Frank Morris on an article looking at the legal implications of this technology. We asked him about the risks:
“The expectation with using people analytics is often that you'll reduce subjectivity and therefore decrease the risk of an intentional discrimination claim. Companies have to be careful that the algorithm that they use doesn't perpetuate biases or otherwise increase the risk of a disparate impact claim. Companies also must be aware of the record-keeping rules that apply to them, whether they're a private company serving the private sector, or a federal contractor that might be subject to different record-keeping requirements under the OFCCP.”
For more, watch the extended interview with Frank and Nathaniel and read their recent article, "Big Data, People Analytics and Employment Decisions: The Rewards and Often Overlooked Risks."