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

Brian Hall - November 19, 2017 - Business Law


A natural part of keeping a business competitive is investigating new technologies. Amazingly, current technology includes artificial intelligence (AI), that has the ability to learn and change its responses as it gathers data over time. Currently AI is capable of serving 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 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.

  1. If your business has fiduciary responsibilities to your clients: AI will likely be legally safer.

AI works faster and more efficiently than a typical human employee. AI allows your business to save time and money; benefits that will transfer 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 exorbitantly more. However, if a task is so complex that using AI would still require a human to review the work, there may not be a fiduciary duty to implement this technology.

  1. If AI will replace a human employee: AI will likely be legally safer.

For example, if AI replaces your stock room worker, there will be less 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 it’s 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.

  1. If AI makes a mistake: It depends.

There is still an open question as to whether AI will create more 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 not clear who will be liable for the accident. If a human was 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 errors, or user errors. If the accident was caused because of an issue with the product itself, the employer may 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 act caused the accident.

If your business chooses to “hire” an AI machine, make sure to evaluate not only how it will help your business financially, but how it will affect your business legally. Currently, there are not extensive laws on AI, so the question of 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 contributed, in part, by University of Texas law student Hayley Ostrin.


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