When AI takes on too much of that human discretion and judgment work, organizations may inadvertently risk losing exempt status for some employees, particularly those classified under the administrative or professional exemptions. This risk from overreliance on AI is even greater in states such as California, which have stricter state exemption standards than the federal FLSA. 

“Over the past two years, the use of AI by employees  —  especially within white-collar professions  —  has surged, with nearly twice as many workers now relying on AI tools for a portion of their daily tasks. So, this problem is real,” said Kathleen Parker, an attorney with K&L Gates in Boston.   

The exemptions facing the most risk involve certain jobs that employers currently classify under the administrative, creative professional, and learned professional categories when those workers rely heavily on AI in their jobs, said Scott Young, an attorney with Thompson Hine in Cincinnati and Washington, D.C. These exemption categories hinge, in part, on employees’ ability to show that they exercise "discretion and independent judgment" on matters of significance in their roles — something that heavy reliance on AI can potentially diminish. 

“The administrative exemption for certain jobs is at most risk because AI may take over analysis, reporting, risk scoring, pricing, contractor selection, and other matters of significance, leaving employees to confirm outputs,” Young said. “Plaintiffs’ attorneys may argue that a role previously classified as exempt under the administrative exemption is therefore reduced and no longer involves the exercise of discretion and independent judgment on matters of significance necessary for the administrative exemption.”  

For creative professionals, for example, generative AI (GenAI) can handle drafting and designing, leaving the human role largely reduced to editing, which is distinct from the original creative work needed to qualify for exempt status under this exemption. For the learned professional exemption, diagnostic and technical AI that interprets data can shift the job from expert evaluation to mere verification, diminishing the independent judgment required for this exemption.  

This article is courtesy of Society for Human Resource Management (SHRM)