I recently moderated a webinar with Trusaic’s John Ford and Norton Rose Fulbright’s Andy Cripe all about the evolving landscape of AI and its implications for compensation and HR. While we celebrated the immense potential of AI, we also dove into the critical considerations for responsible adoption.
The Rapid Rate of AI Innovation vs. The Slow and Steady Grind of Law
One of the central themes emphasized by panelist Andy Cripe is the stark contrast between the fast-paced development of AI and the much slower evolution of law. While massive investments are being poured into AI in the private sector and by governments (specifically a whopping $109 billion in private sector spending in the US in 2025), the legal framework governing AI is still largely based on existing laws applicable to human decision-making. This means organizations won't find a single, comprehensive "AI law" but rather an expanding list of regulations trying to keep pace with new challenges.
Four Key Legal Concerns for AI in HR & Compensation Work
To help compensation professionals maneuver the legality of AI usage, Andy outlined four major areas of legal concern for using AI in employment and pay-related purposes:
- Data Privacy and Compliance: While often the first concern, Andy suggested this might not be the biggest issue. Because robust frameworks like GDPR in Europe and various US state laws (such as those in California or Illinois) already address data collection, maintenance, transfer, and usage with an emphasis on consent and security. However, the increasing emergence of data use policies shows a growing need for AI tool assessments.
- Bias and Discrimination: A significant risk is algorithmic bias, where AI models trained on existing data sets can produce skewed outcomes, leading to disparate impacts on groups of employees. This is particularly relevant for compensation and ensuring pay fairness! Regular statistical analysis and human involvement is crucial to avoid AI-created imbalances.
- Unfair Dealing, Deceptive Practices, or Fraud: This was highlighted as potentially the most significant, yet least discussed, legal issue. The "black box problem" of AI (where human decisions appear to be made but are merely adopting unaccountable AI outputs) can lead to false, misleading, or dishonest practices. This can occur when employees use generative AI tools without proper disclosure or understanding. Evaluating your team’s AI usage and educating them on when these tools are appropriate will help keep reliable, human decisions where they’re needed.
- IP Protection: AI systems can collect and use vast amounts of information, raising concerns about data ownership and intellectual property. You can’t just load data from your survey vendors into any generative AI tool — that’s going to violate vendor agreements and compromise the safety of your data!
AI's Role in Enhancing Compensation Work
When used responsibly, AI can significantly enhance compensation work in several areas:
- Data Analysis: AI tools can provide plain language narrative descriptions of statistical results, making complex data more accessible to users.
- Pay Fairness: AI can help model different scenarios for pay fairness issues, allowing organizations to quickly understand the potential impact of various compensation decisions across large workforces. This provides insights at scale that would be impossible for humans alone.
- Job Matching and Architecture: AI can assist in matching internal jobs to survey jobs or other datasets and identifying similar internal jobs to prevent "bloat" in job catalogs.
- Anomaly Detection: After compensation processes are complete, AI can identify outlier adjustments, such as top performers receiving no increase or those at the bottom of the range receiving nothing.
We wrapped up the webinar with the message that AI should support, not replace, human decision-making. Our whole panel agreed that a practical, human-centered approach to AI adoption is essential to mitigating risks and maximizing benefits. Collaborate with external and internal advisors to identify well-vetted AI tools that genuinely enhance productivity and improve results!