AI-Generated Employee Handbooks Are Causing Mayhem At The Companies That Use Them

Missing anti-harassment clauses, bungled PTO guidelines and botched bereavement leave terms: ChatGPT-generated company policies are exposing employers to a buffet of legal and financial risks.As a cost and time-saving measure, HR professionals are increasingly using AI to spin up employment documents like handbooks, offer letters, and separation agreements.arlier this year, Carly Holm, CEO of HR consultancy Humani, received a call from a New York-based client.

Companies are increasingly turning to AI to generate important, often legally binding, employment documents — from company handbooks and workplace policies to contracts like offer letters and separation agreements, according to interviews with four HR and payroll service providers.

Another example: In the UK, an HR team used Microsoft Bing’s AI copilot to produce a severance agreement, Grace said. The legally binding document, which omitted essential information, was then sent to the employee’s legal counsel. Handbooks and workplace policies are often hundreds of pages long. These comprehensive documents are each tailored to reflect company culture and incorporate local laws that uniquely apply to firms’ employees. But while AI tools can help whip up a first draft of these documents in seconds, their underlying training datasets are often out of date when it comes to constantly evolving labor laws, Ben Houghton, VP of engineering at Iris, said. Then, there are a slew of privacy concerns.

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