The Virginia legislature recently passed a consumer protection bill designed to regulate AI decision-making systems and aims to prevent algorithmic bias. Artificial intelligence systems that make employment decisions, which would include recruitment, hiring, performance review, and termination decisions, are included in the bill.
The Virginia High-Risk Artificial Intelligence Developer and Deployer Act, H.B. 2094, targets businesses that develop, modify, or deploy high-risk AI within the state. The bill now moves to the governor for signature.
Under the Virginia AI Act, a high-risk AI system is one designed to autonomously make – or play a substantial role in making – consequential decisions that significantly impact an individual’s life. These decisions include matters related to parole, probation, pardons, education enrollment, employment, financial and lending services, healthcare, housing, insurance, and legal services.
As defined in the bill, a deployer refers to any entity conducting business in Virginia that utilizes or deploys a high-risk AI system to make consequential decisions within the state. A developer is any person doing business in Virginia who develops or intentionally and substantially modifies a high-risk artificial intelligence system for sale or distribution to consumers in the state.
The bill would require both developers and deployers to use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination resulting from the use of a high-risk AI system. It would require deployers to provide disclosures to consumers regarding high-risk AI systems, including their purpose, nature, and the consequential decisions they make, while also offering consumers the opportunity to correct data, appeal decisions, and request human review.
A burden would also fall on deployers to maintain records of impact assessments, monitor post-deployment risks, and update disclosures when significant changes are made, while integrators would need to adopt acceptable use policies and provide clear notifications regarding adjustments or modifications to AI systems.
The bill includes a comprehensive list of exemptions. Specifically, it does not apply to the federal government or any federal agency, certain financial institutions (e.g., banks, credit unions, mortgage lenders, savings institutions), or their affiliates, subsidiaries or service providers, insurers, and healthcare entities.
The Attorney General would enforce the act and issue a civil investigative demand if there is reasonable cause to believe a violation has occurred. Violators are subject to civil penalties up to $1,000, or between $1,000 and $10,000 for willful violations, plus attorney fees and costs.
Potomac Legal Group is monitoring developments in this AI legislation and other regulatory initiatives of artificial intelligence used in employment decisions. If you have concerns about your employment situation, or if you believe AI decision-making systems have affected your employment, contact our attorneys today.
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