Founders: Are Machines (AI) Legally Safer for Your Business Than Humans?

Brian Hall - November 19, 2017 - Artificial Intellience, Business Law


A natural part of keeping a business competitive is investigating new technologies. Amazingly, current technology includes artificial intelligence (AI), which has the ability to learn and change its responses as it gathers data over time. AI can serve as a virtual assistant, managing and organizing stock rooms, proofreading and editing documents, and driving cars. It is undeniable that AI will revolutionize how we do business. While adopting AI technology may be a good move for a business, a prudent business owner will also consider whether relying on AI over humans will create legal liabilities. The answer will vary based on the business and technology, but the general answer we submit is most likely not.

AI may be legally safer if your business has fiduciary responsibilities to your clients.

AI works faster and more efficiently than a typical human employee. AI allows your business to save time and money, transferring benefits directly to your client. If your business has a fiduciary responsibility to your clients, using AI to complete tasks quickly may soon become a legal duty – especially if a human performing the same task would cost more. However, if a task is so complex that AI still requires a human to review the work, there may not be a fiduciary duty to implement this technology.

If AI replaces a human employee: AI may be legally safer.

For example, if AI replaces your stockroom worker, there will be fewer legal risks for you as an employer. AI does not have legal rights regarding wages, retirement, health plans, and working overtime. If AI gets damaged or injured as moving boxes, it cannot sue you for negligence. AI does not require a working environment to meet certain safety criteria. AI cannot sue for discrimination or harassment. When it comes to legal liabilities employers face from hiring humans, AI is likely to be the legally safer option- that is, until AI gains civil rights.

If AI makes a mistake: It depends.

There is still an open question as to whether AI will create liability for employers if the AI makes a mistake. For example, if your business uses self-driving cars for deliveries, and the car gets into an accident, it is unclear who will be liable for it. If a human were the driver, the employer would be vicariously liable if the accident occurred within the employee’s scope of work. However, mistakes that occur with the use of AI may arise from either programming or user errors. If the accident was caused because of an issue with the product, the employer might be able to shift liability onto the manufacturer. However, the law is unclear, and an employer may still be just as responsible for the accident as if a human had been driving. However, if the accident occurred based on a user error by the employer, such as putting in an incorrect address or overloading the vehicle, the employer will most likely be liable for damages because the employer’s actions caused the accident.

If your business chooses to “hire” an AI machine, evaluate how it will help your business financially and how it will affect your business legally. Currently, there are no extensive laws on AI, so whether AI or humans will be legally safer will continue to evolve, likely at a slower pace than the technology.

Founders’ Friday is a series published by attorney Brian A. Hall of Traverse Legal, PLC d/b/a Hall Law, dedicated to legal considerations facing founders and start-ups. This week’s post was contributed, in part, by University of Texas law student Hayley Ostrin.

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