The regulatory landscape for artificial intelligence in the workplace has reached a pivotal inflection point—and HR professionals are squarely at the center. President Trump’s recent executive order targeting state and local AI regulations creates both uncertainty and opportunity for forward-thinking HR teams. Understanding what this means for an employer’s talent acquisition technology, performance management systems, and workforce analytics has become both an increasingly important challenge and opportunity.
The Regulatory Clash: What’s Really Happening
In December 2025, the administration issued Executive Order 14365, “Ensuring a National Policy Framework for Artificial Intelligence,” which seeks to establish uniform federal AI standards by challenging what it characterizes as “innovation-chilling” state regulations. HR professionals who have spent the past two years building compliance frameworks around state-specific AI hiring laws may be concerned about how this development impacts current and future strategy, investment, and compliance.
The Executive Order employs multiple enforcement mechanisms, of which HR professionals must be aware. The Department of Justice has established an “AI Litigation Task Force” specifically charged with challenging state AI laws in court. The Department of Commerce must identify “onerous” state laws for potential legal challenge by early March 2026, and federal funding, including the $42.5 billion Broadband Equity, Access, and Deployment Program, may be conditioned on states’ regulatory posture.
There are likely to be challenges; however, the EO and subsequent enforcement and policy actions implementing the EO are likely to face significant resistance from states. States may challenge the EOs on the grounds that an executive order cannot preempt state laws without explicit congressional authorization. Several states and municipalities, including California, Colorado, Illinois, Texas, and New York City, have already enacted AI regulations addressing transparency, anti-discrimination, and safety. Tracking the legal challenges and impact on employer obligations as the challenges work their way through the legal pipeline will inform potential proactive and necessary compliance.
While it remains to be seen how this enforcement effort will roll out, executive orders set federal policy, but they do not erase existing law or end an employer’s compliance obligations. Until courts rule otherwise, state laws remain valid and enforceable. Employers should carefully assess and comply with applicable law, but evaluate their risk tolerance while challenges remain pending, as such challenges will likely take years to resolve and could potentially leave employers with uncertainty during that time.
Current Compliance Obligations: A Priority Checklist
The current reality means that many HR teams are maintaining compliance with existing laws while monitoring this evolving situation. Several state and local AI employment laws are currently in effect or taking effect imminently.
- New York City Local Law 144, in effect since January 1, 2023, requires bias audits and candidate notice for automated employment decision tools.
- California’s Civil Rights Department AI Regulations, effective October 1, 2025, impose antidiscrimination requirements for AI systems in employment decisions.
- As of January 1, 2026, the Illinois AI Discrimination Law requires transparency (in the form of notice) and fairness in AI hiring tools.
- California’s Consumer Privacy Agency AEDT Regulations add enhanced privacy protections and consent requirements.
- Looking ahead, Colorado’s Consumer AI Law takes effect June 30, 2026, with comprehensive disclosure and risk assessment obligations.
- For employers with global operations, the EU AI Act becomes enforceable August 2, 2026, classifying employment AI systems as high-risk. Other international jurisdictions also have evolving AI compliance obligations.
Five Strategic Actions HR Leaders May Want to Take Now
Given the current legal uncertainty, many organizations are taking the following steps:
1. Establish Clear AI Governance Structures. HR leaders may want to create cross-functional AI governance committees that include HR, Legal, IT, and Compliance stakeholders. Such governance bodies typically define decision-making authority and accountability for AI tool procurement, deployment, and monitoring. A strong AI governance framework can support AI goals regardless of how the federal-state regulatory conflict resolves.
2. Develop Comprehensive AI Policies. Policies may want to address notice and consent requirements across all jurisdictions where an employer operates. It may also be helpful to document which AI tools are used in which employment processes-from résumé screening and video interview analysis to performance evaluation and promotion decisions.
3. Implement Robust Training Programs. Organizations may want to equip their HR team, hiring managers, and business leaders to understand both the capabilities and limitations of AI tools. Training geared towards legal compliance, ethical use, and practical guidance on when human review and intervention are required may be particularly useful.
4. Conduct Regular Auditing. HR teams may want to implement bias-auditing protocols to assess the impact of AI tools on protected groups. Under existing federal anti-discrimination law, if an employment practice—including any automated decision-making tool—causes a significant adverse effect on a protected group, it must be job-related and consistent with business necessity.
5. Track Legal Developments Continuously. Not only should HR teams monitor legal challenges and their impact on an employer’s compliance obligations, but employers may also want to seek regulatory clarification from state enforcement agencies on their obligations in light of the executive order.
The Bigger Picture: Why This Matters for HR Strategy
All fifty states, Puerto Rico, the Virgin Islands, and Washington, D.C. have introduced AI legislation, with focus areas including deepfakes, privacy, and industry-specific regulations-particularly in labor and employment. California leads with more than two dozen enacted AI laws, followed by Texas, Utah, and New York.
Even if certain state AI laws are eventually preempted through litigation, federal anti-discrimination law will remain fully applicable, as will non-AI-specific state laws, including antidiscrimination statutes, tort claims, and contract claims. AI governance, therefore, remains relevant even if some state-specific AI laws are eventually invalidated.
The Bottom Line for HR
This executive order represents a coordinated federal initiative to consolidate AI regulation at the national level while creating significant uncertainty for the growing number of state and local AI laws. For HR professionals, the path forward requires balancing current compliance obligations with strategic preparation for regulatory change.
Building a solid AI governance framework now positions HR teams to adapt efficiently as the regulatory picture becomes clearer.
Jennifer Betts is the office managing shareholder in Pittsburgh for Ogletree Deakins, one of the largest labor and employment law firms representing management in the world. She is also the co-chair of the firm’s national Technology Practice Group, and a member of the Steering Committee of the firm’s Traditional Labor Relations Practice Group. She represents employers in all areas of labor and employment law. Jennifer may be reached at jennifer.betts@ogletree.com.
Danielle Ochs is a shareholder in San Francisco for Ogletree Deakins. She serves as co-chair of the firm’s Technology Practice Group, and represents an array of tech employers, as well as employers in a range of other local, national, and international industries, including higher education. Danielle may be reached at danielle.ochs@ogletree.com.
Nonnie Shivers is the office managing shareholder in Phoenix for Ogletree Deakins. She advises, counsels, and litigates for employers across all aspects of employment law, with an emphasis on complex, proactive compliance projects. Nonnie may be reached at nonnie.shivers@ogletree.com.