AI is increasingly entering recruitment, performance management, and other HR processes, creating new employment practices liability exposures as employers rely less on human oversight, according to Alex Ilkos (pictured), client executive, professional services, at Purves Redmond Limited.
Employment practices liability (EPL) demand continues to be driven by traditional allegations such as wrongful termination, discrimination, harassment and retaliation, but the growing use of artificial intelligence is adding another layer of potential exposure.
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"AI is also starting to become part of the conversation," Ilkos told Insurance Business.
"AI is becoming part of the hiring and performance management," he said, "so as you use that more, it creates an opening or a potential exposure because there's less human involvement or human oversight over what goes on from that end."
The exposure shows up on both sides of the employment relationship, according to Ilkos: internally, when AI tools help evaluate current employees, and externally, when employers use automated systems to screen job applicants, a practice now subject to disclosure requirements in job postings.
As employers lean further into AI across recruiting, screening, onboarding, and performance management, Ilkos said pinpointing responsibility gets harder when something goes wrong, since a discriminatory outcome could trace back to the tool itself or the organization using it.
That ambiguity comes down to a broader shift, according to Ilkos: the more businesses adopt these tools, the less direct human oversight remains in the process itself.
He said the wider implications of AI remain difficult to predict, since businesses are adopting the technology while governance frameworks are still catching up.
"I think certain businesses are trying to get ahead of the curve so that they're bringing in the tools faster than they can put the appropriate governance or framework in place to monitor those tools," he said.
Ilkos said he hasn't personally seen an AI-based EPL claim yet, but expects the issue to grow more significant as adoption continues to outpace governance.
AI isn't the only structural shift reshaping EPL exposure, according to Ilkos. Remote and hybrid work arrangements haven't created a new category of claim, he said, but they've changed how existing ones surface.
"Issues around workplace conduct, harassment, or performance management accommodation type of issues, they can be a lot more difficult to identify and manage when your employees aren't actually physically together," Ilkos said.
Shifting return-to-office expectations add a further complication, he said, as employers navigate accommodation requests that keep changing.
"The return to work is constantly changing," Ilkos said. "It's going to open the gate to potential accommodation-related concerns."
Remote hiring compounds the issue further, Ilkos said, since employers recruiting across provinces or internationally now have to navigate a patchwork of different rules and regulations, rather than operating under a single jurisdiction the way a Toronto-only employer once could.
For brokers, that jurisdictional spread means a client's exposure can no longer be assessed against a single set of provincial rules. A firm hiring across Ontario, British Columbia and Quebec simultaneously is effectively managing three separate regulatory environments at once, each with its own thresholds for accommodation, termination notice and human rights protections, well before AI is added into the equation.
Rising cost and complexity, not just AI, is also driving demand, according to Ilkos.
"Employers take EPL a lot more seriously just because any employment-related dispute has become a lot more expensive and complex," he said.
That awareness isn't limited to large employers, Ilkos said, and shows up just as often among smaller organizations that assume their size puts them below the threshold where employees would push back.
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"There's also a greater awareness among employees of what their rights are and the kind of avenues they have available to them when they feel that they've been treated unfairly," Ilkos said.
Taken together, the picture Ilkos describes is one where several forces are compounding at once rather than replacing each other. AI adoption, a more dispersed and jurisdictionally complex workforce, and a more litigation-aware employee base are all pushing in the same direction, toward EPL claims that are harder to predict and more expensive to resolve than the traditional wrongful-termination file brokers have historically underwritten around.
