The latest employment law compliance updates highlight significant developments across various regulatory areas that impact businesses and employers in the United States. From the evolving cannabis policy landscape to enhanced Green Card validity extensions and new AI guidelines, this collection of articles presents both opportunities and challenges for employers navigating compliance. Understanding these changes is essential for staying ahead of potential compliance risks and ensuring adherence to federal, state, and local regulations.

FEDERAL UPDATES

Cannabis Rescheduling: Closing of the Comment Period and What Lies Ahead

The proposed rescheduling of cannabis from Schedule I to Schedule III under the Controlled Substances Act (CSA) marks a pivotal moment in the evolution of U.S. cannabis policy but may bring few practical changes to state-licensed markets. On May 20, the U.S. Department of Justice (DOJ) and the Drug Enforcement Administration (DEA) issued a Notice of Proposed Rulemaking (NPRM) to initiate the change, launching a 60-day public comment period that concluded on July 22. The proposal has stirred significant interest and debate among stakeholders, including state regulators, advocacy groups, health experts, individuals, and licensed businesses, resulting in the posting of more than 43,000 comments.

This article will explore the diverse spectrum of public comments on the proposed rule, the evolving understanding of the implications of moving cannabis to Schedule III, and the procedural steps that may lie ahead in the rulemaking process.

Closing of the Comment Period

The 60-day public comment period for the proposed rescheduling rule officially closed on July 22. The DOJ received approximately 43,000 comments, about 17% of which (approximately 7,500 comments) were submitted in the final three days. A wide array of stakeholders, including state regulators, advocacy and opposition groups, health experts, and patients, all voiced their perspectives on the proposal, reflecting the complex and multifaceted nature of cannabis policy in the U.S.

Among the pro-reform advocates, an analysis by the Drug Policy Alliance (DPA) shows that a majority of commenters believe that rescheduling cannabis to Schedule III would not go far enough in addressing the federal prohibition’s broader implications. The DPA found that 69% of commenters supported the complete de-scheduling of cannabis from the CSA, as opposed to rescheduling to Schedule III. The DPA’s analysis also revealed that a substantial portion of the comments emphasized the need for federal marijuana reform to advance racial justice and social equity.

Public comments from state regulatory agencies also highlighted a need for clarity on how rescheduling would impact state-legal recreational cannabis markets. The NPRM specifically states that “[i]f marijuana is transferred into Schedule III, the manufacture, distribution, dispensing, and possession of marijuana would remain subject to the applicable criminal prohibitions of the CSA.” This statement has led to uncertainty about the practical implications of rescheduling for existing state markets.

For instance, in addition to comments submitted by the Cannabis Regulators Association in July, the Michigan Cannabis Regulatory Agency (CRA) submitted comments providing information on the state’s medical program in support of the finding that cannabis does have a currently accepted medical use in treatment in the U.S., and stressed the importance of federal guidance on the implications of rescheduling in several key areas, including the applicable general requirements for Schedule III substances, banking and taxation, bankruptcy protections, product packaging, labeling, advertising, and safety standards, transportation and interstate commerce, research, and federal enforcement priorities and regulatory agencies. The CRA’s executive director stated that “the CRA wanted to make it very clear in our public comment that rescheduling will do little good if the federal government fails to provide clear and robust whole-of-government guidance on the implications of the rescheduling.”

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USCIS: Automatic 36-Month Green Card Validity Extension for I-90 Renewals

As of September 10, 2024, USCIS will automatically extend the validity of Permanent Resident Cards (or “Green Cards”), for which a Form I-90, Application to Renew or Replace Permanent Resident Cards has been submitted, for 36 months. The previous automatic extension was for 24 months.

Although Permanent Resident status does not need to be renewed, the physical Green Card itself needs to be renewed for practical reasons. For most people, the card expires after 10 years. The card is essential for employment authorization verification and travel.

Currently, USCIS is very much backlogged. It is taking more than two years to process I-90 applications and applications for extension cannot be filed more than six months before the card’s expiration date. Until now, USCIS had automatically extended Green Cards for 24 months. That time frame is no longer enough. The additional time will not only help applicants, but it also removes some of the stress on USCIS caused by the backlog.

USCIS has updated the language on the I-90 receipts with the 36-month extension and is issuing the updated receipts for newly filed forms and to those with pending I-90 applications. The expired Green Card, along with the new receipt, can be used for employment authorization or travel.

Make sure you have both documents when you travel (and for employment authorization verification). Keep in mind that some countries may not find the receipt notice suitable documentation for boarding an aircraft. If this is a concern, request an appointment at a USCIS Field Office by contacting the USCIS Contact Center to receive an ADIT (Alien Documentation, Identification and Telecommunications) stamp in your passport. An ADIT stamp will be necessary if you have lost your Green Card and are waiting for a replacement.

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DOL Issues “AI & Inclusive Hiring Framework” Through Non-Governmental Organization

On September 24, 2024, the U.S. Department of Labor (DOL) announced publication of its “AI & Inclusive Hiring Framework” website, described as “a new tool designed to support the inclusive use of artificial intelligence in employers’ hiring technology and increase benefits to disabled job seekers.” Previously, DOL released AI Principles, with guidance for employers and AI developers about designing and implementing AI systems in the workplace. DOL issued these AI Principles at the direction of President Biden’s Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. The AI Executive Order and AI Principles did not specify what practices run afoul of the AI Principles, but DOL’s AI Framework seeks to “chart[] a clear course for employers to navigate” implementation of AI systems in the workplace.

The AI Framework was not published by the DOL but by the Partnership on Employment & Accessible Technology (PEAT), which DOL’s Office of Disability Employment Policy (ODEP) funded to develop the AI Framework. Even though PEAT is funded by ODEP, the organization is managed by a private company. According to PEAT’s website, “PEAT material does not necessarily reflect the views or policies of” ODEP or DOL and is not endorsed by the federal government. PEAT’s mission is to “to foster collaborations in the technology space that build inclusive workplaces for people with disabilities” with a vision of “a future where new and emerging technologies are accessible to the workforce by design.” PEAT previously provided input to federal agencies including the EEOC on guidance related to AI and the employment of people with disabilities.

According to DOL’s press release, ODEP and PEAT “developed the [AI Framework] with input from disability advocates, AI experts, government and industry leaders and the public at large.” The AI Framework concludes a process first discussed during DOL and PEAT’s virtual think tank held on April 17, 2023, where attendees included “federal agencies, technology innovators, disability organizations and civil rights groups.” Noticeably absent from the attendees were employers, even though the website expressly states that the “Framework’s primary audience is employers who deploy artificial intelligence (AI) hiring technology.” While employers were consulted during group stakeholder sessions, employers did not have an opportunity to provide direct feedback on the draft guidance.

The AI Framework consists of ten focus areas: (1) identify legal requirements; (2) establish staff roles; (3) inventory technology; (4) work with vendors; (5) assess impacts; (6) provide accommodations; (7) use explainable AI; (8) ensure human oversight; (9) manage incidents; and (10) monitor regularly. Although these focus areas appear different from prior DOL and other agency guidance or initiatives with respect to AI, the focus areas largely echo the AI Principles and President Biden’s AI Executive Order. For instance, all three urge implementation of AI with human oversight and in an ethical, transparent manner that employees and applicants can understand. Additionally, all three center on employee rights. These similarities serve to underscore two points. First, the federal government encourages the use of AI for workers’ benefit. Second, federal agencies are not providing clear guidance or rules relating to employers’ implementation of AI systems.

Within the AI Framework website, however, PEAT attempts to provide employers with resources to consider when implementing AI systems. For instance, within the first focus area, the AI Framework lists two major practices and four major considerations related to legal requirements. Within the four major considerations, PEAT references various laws, such as the Americans with Disabilities Act, the Rehabilitation Act of 1973, Title VII of the Civil Rights Act of 1964, and other laws, along with official regulatory and policy guidance from federal agencies.

Despite being modeled on the National Institute of Standards and Technology’s (NIST) AI Risk Management Framework, PEAT’s guidance may be lacking in practical applicability. Unlike the NIST framework, PEAT’s guidance leans heavily on third-party auditing, although there are no consensus standards for AI auditing in general, much less for disability discrimination. Additionally, PEAT’s guidance refers to the Center for Democracy and Technology’s “Civil Rights Standards,” a policy document and model legislation not designed as practical guidance for employers and vendors.

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Employer Zero-Tolerance Marijuana Policy Justified Termination, Federal District Court Agrees

Zero-tolerance marijuana policies are not unlawful in Illinois, a federal district court has determined, providing greater clarity for employers. In late 2019, Illinois amended its marijuana law, the Cannabis Regulation and Tax Act (CRTA), to ensure employers could continue to implement policies prohibiting workers from using marijuana or marijuana products despite the state’s decision to permit adult recreational marijuana use. Nevertheless, the extent to which employers could enforce their policies and possible conflicts with Illinois’s law prohibiting discipline for lawful non-work activities remained.

A new court decision—White v. Timken Gears & Services, Inc., No. 21-cv-2290 (N.D. Ill. July 17, 2024)—has answered some of these questions, providing further support for Illinois employers that have adopted and want to continue to enforce zero-tolerance policies regarding marijuana.

Background

Employer policy prohibited marijuana and required random testing.

The employer company develops, manufactures, and sells industrial motion products, such as augers, gear drives, and transmissions. The company implemented a Drug and Alcohol Policy that prohibited the unlawful manufacture, distribution, dispensation, possession, or use of controlled substances or alcohol in the workplace. The policy defined “controlled substances” to include marijuana.

The employer also required employees at its manufacturing and distribution centers to undergo random drug screenings. The policy provided that an employee, upon a first-time positive test result, would be required to participate in counseling, stop using the substance for which they tested positive, and submit to unannounced follow-up testing. A second positive result would subject that employee to immediate termination of employment.

Employee tested positive for marijuana and participated in the Employee Assistance Program.

The plaintiff-employee worked for the employer as a Territory Account Manager. In that role, he worked from home selling products and repair services, but also drove a company car to customers’ facilities.

On December 6, 2019, the employee tested positive for marijuana on a random drug test. He participated in the employer’s Employee Assistance Program and continued to work during that time, except he was not allowed to drive a company vehicle.

Employee tested positive for marijuana in follow-up testing.

On January 6, 2020, the employee was required to submit to a follow-up drug test, and his result was negative. On January 21, 2020, the employee was required to take another drug test, and this time his result was deemed a “negative dilute,” which the employer treated as a failed test. The employee was allowed to take a re-test, and his result was again deemed a “negative dilute.” The employer was unable to reach the employee via phone afterward, and the employee did not respond to the company’s email to him. On January 27, 2020, the employer permitted the employee to undergo a second re-test, and his result was positive for marijuana. As a result, the employer terminated the employee’s employment citing his violation of the Drug and Alcohol Policy.

Employee sues for alleged violation of the Illinois Right to Privacy in the Workplace Act (IRWPA)

The employee filed suit against the employer for allegedly violating the IRWPA, 820 ILCS 55/1, et seq. and the case was removed to the U.S. District Court for the Northern District of Illinois.

The IRWPA prohibits an employer from firing an employee “because the individual uses lawful products off the premises of the employer during nonworking and non-call hours.” 820 ILCS 55/5(a). As of January 1, 2020, cannabis is a “lawful product” under the IRWPA.

However, Illinois’s Cannabis Regulation and Tax Act (CRTA) addresses employment and employer liability for conduct relating to the use of cannabis under state law. Section 10-50 specifically addresses what actions employers can take regarding cannabis-related violations. Those provisions were central to the court’s analysis of the employee’s claims against the employer.

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A view from DC: The proposed AI Civil Rights Act would require audits all the way down

Consider the philosophical concept known as infinite regress. Every belief or proposition requires justification, but each justification itself requires further justification, leading to an endless chain.

The idea is usually illustrated — somewhat humorously and somewhat alarmingly — with gargantuan turtles. We imagine the turtle holding our world on its back must be supported by another, larger, turtle. And so on. As the saying goes, it is turtles all the way down.

Infinite regress challenges the foundation of knowledge. If every belief needs another belief to justify it, we may never reach a solid ground or starting point. This vicious cycle is a fundamental challenge of epistemology.

There are similar challenges in artificial intelligence governance. For one, the inherently opaque nature of many AI systems makes it incredibly difficult to determine the origin or contributing factors to an output with any certainty. Does an AI system include personal data when it is made up of probabilities all the way down?

AI assurance also presents a recursive challenge: If we rely on audits and external assessments to solve for issues like bias, do we also audit the auditors? Should we audit the fact that audits were completed? Should we audit the audit of the audits?

The need for external validation at multiple stages of AI development and deployment is reflected in a new bill introduced by U.S. Sens. Ed Markey, D-Mass., and Mazie Hirono, D-Hawaii, who drafted the bill with the support of the Lawyers’ Committee for Civil Rights Under Law and the Leadership Conference on Civil and Human Rights.

In fortuitous timing, Lawyers’ Committee President and Executive Director Damon Hewitt received an award this week at the Electronic Privacy Information Center's Champions of Freedom Awards. In his acceptance speech, Hewitt echoed a popular adage among civil rights advocates, "anything about us without us can never be for us."

The draft AI Civil Rights Act includes at least six types of mandatory assessments, many of which take the form of third-party audits required to be submitted within 30 days to the U.S. Federal Trade Commission. The bill also has a significantly broader scope, stronger data rights and enhanced transparency obligations compared to similar legislation such as the Colorado AI Act.

Preliminary evaluations for developers and deployers

First, developers and deployers of AI systems that affect "consequential actions" must each undertake a "preliminary evaluation of the plausibility that any expected use of the covered algorithm may result in a harm."

To understand this and later requirements, we must review the types of actions and harms included in scope of the bill.

Broader in every way than similar legislative efforts at the state level, the bill appears to cover both commercial and public sector actions and decisions facilitated by AI systems. Covered consequential actions would include those that have a material effect on employment, education, housing, utilities, health care, financial services, insurance, criminal justice, elections, government benefits and services, public accommodations, and anything with a "comparable legal, material, or similarly significant effect on an individual’s life," as determined by FTC rulemaking.

Covered harms from a consequential action are also broader than similar legislation such as the Colorado AI Act. In their initial assessments, developers and deployers would be looking for plausible evidence of any "non de-minimis” adverse effect on an individual or group of individuals:

(A) on the basis of a protected characteristic;

(B) that involves the use of force, coercion, harassment, intimidation, or detention; or

(C) that involves the infringement of a right protected under the Constitution of the United States."

After the preliminary evaluation, if the developer or deployer uncovers a plausible harm from the expected use of the AI system, it must engage an independent auditor to conduct a pre-deployment evaluation.

The bill requires auditors to be non-conflicted third parties who can review systems to assess the design, training and mitigation measures that went into their design and deployment.

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STATE, CITY, COUNTY, AND MUNICIPAL UPDATES

Texas Attorney General Reaches Largest-Ever Biometrics Settlement with Meta

On July 30, 2024, a Texas state court issued an Order finalizing the largest-ever biometrics settlement, between the Texas Attorney General and Meta for a staggering $1.4 billion. The settlement resolves a longstanding civil action brought by the Texas Attorney General in 2022 asserting violations under Texas’s Capture or Use of Biometric Identifier Act (“CUBI”).

The Texas suit alleged that Meta, formerly known as Facebook, collected Texas residents’ biometric data through facial recognition algorithms employed in Meta’s tagging technology, which Meta has since discontinued. Notably, this settlement comes after Facebook settled a private class action lawsuit under the Illinois Biometric Information Privacy Act in 2022 for $650 million. To date, the Texas settlement is the largest ever biometric settlement on record, whether by private right of action or state enforcement proceeding.

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The County of Los Angeles Will Soon Post Notice and Sample Documents to comply with the County’s Sweeping Fair Chance Ordinance

Starting after Labor Day, employers with jobs located in the unincorporated areas of the County of Los Angeles, including work-from-home and hybrid positions, must comply with the County’s fair chance hiring ordinance. The ordinance, which imposes obligations well beyond existing federal and state law, and which extends to contractor and freelance workers, will take effect on Tuesday, September 3, 2024. It adds to the many and considerable headaches employers already have regarding criminal background checks in California.

Beginning September 3, 2024, the County’s Department of Consumer and Business Affairs (DCBA) will post the specific notice required by the ordinance and sample documents. The DCBA’s website is here. As it stands now, the website has a different posting, one not intended for use with the fair chance hiring ordinance, and otherwise states it is “under construction.”

Recommendations

Employers with operations in, or that do business or have contracts with, the County, at a minimum, should evaluate necessary changes in when and how they inquire into criminal history during the hiring process. They should also consider whether to undertake a broader (and privileged) assessment to strengthen their compliance with federal, state, and local employment laws that regulate use of a candidate’s criminal history. Suggested action items for employers with employees in the County and other jurisdictions having ban-the-box laws are as follows:

• • Review and update job applications and related forms for impermissible inquiries regarding criminal records;
  • Review and update workplace postings to help ensure all required postings are included;
  • Review and update company webpages for necessary additions about fair chance hiring;
  • Provide training to recruiters and other personnel involved in posting job openings;
  • Provide training to personnel who conduct job interviews and make or influence hiring and staffing decisions to explain permissible inquiries into, and uses of, criminal history;
  • Provide training to personnel involved in ordering and adjudicating background reports;
  • Review written and electronic communications about the hiring process, including conditional job offer templates and pre-adverse action and adverse action notices;
  • Plan for the requirement to prepare additional documentation for the individualized assessment and record retention;
  • Plan for delays in staffing openings due to delays in receiving background reports; and
  • Review the hiring and screening process to help ensure compliance, including the timing of background checks, the distribution of mandatory notices, and the application of mandatory deferral periods.

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Illinois Passes State Law Offering Protection to Employees from Unfair Enforcement of Employment Verification Practices

On August 9, 2024, Illinois Governor JB Pritzker signed Senate Bill 0508 (“SB0508”) into law. This new law provides additional employment protections for individuals flagged by an employment eligibility verification system, including federal E-Verify, as having identification discrepancies. The new rights and protections created by SB0508 will take effect on January 1, 2025. This evaluation does not address whether the state law directly restricts or curtails the use of E Verify. This is a separate discussion best conducted with employment immigration counsel.

In May of 2023, the state amended its Illinois Right to Privacy in the Workplace Act to mandate a specified process employers need to follow if they choose to take an adverse employment action against an employee after receiving notice from an employment eligibility verification system of a discrepancy between an employee’s name and social security number. The May 2023 amendment also granted employees certain rights and protections if any such discrepancies arose.

On the heels of this prior amendment, SB0508 clarifies an employee’s rights in the event of an E-Verify “no match.” The new law will prevent employers from imposing work authorization verification requirements that are greater than those required by federal law. If an employer asserts that a discrepancy exists in an employee’s employment verification information, the employer is obligated to provide the employee with certain notices. These notices include the following requirements:

• • Providing the employee with the specific document(s) that the employer deems to be deficient, the reason for deficiency, and upon request by the employee, the employer must give the employee the original document forming the basis for the deficiency within seven business days, and would require employers to give employees time to correct documentation discrepancies;
  • Instructions on how the employee may correct the alleged deficiencies, if required to do so by law;
  • An explanation of the employee's right to have representation present during related meetings, discussions, or proceedings with the employer, if allowed by a memorandum of understanding concerning the federal E-Verify system; and
  • An explanation of any other rights the employee may have in connect with the alleged discrepancies.

In addition to providing these notices, SB0508 also affords employees additional rights and protections when an employer receives notification from any federal or state agency of a discrepancy in relation to work authorization. These rights and protections include the following:

• • The employer must not take any adverse action against the employee based on notification of discrepancy;
  • The employer must provide a notice to the employee as soon as practicable, but not more than five business days after the date of receipt of the notification, unless a shorter timeline is provided for under federal law or a collective bargaining agreement. The notice must include an explanation of the state or federal agency’s notification of discrepancy and the time period the employee has to contest the determination from the federal or state agency.
  • The employee may have a representative of the employee's choosing in any meetings, discussions, or proceedings with the employer.

SB0508 also provides new provisions that require employers to provide notice to each current employee, by posting in English and in any language commonly used in the workplace, of any inspections of I-9 Employment Eligibility Verification forms or other employment records conducted by the inspecting entity within 72 hours after receiving notice of the inspection. The posted notice shall contain the following details:

• • The name of the entity conducting the inspections of I-9 Employment Eligibility Verification forms or other employment records;
  • The date that the employer received notice of the inspection; and
  • The nature of the inspection to the extent known by the employer; and a copy of the notice received by the employer.

The new law makes an important note that if during an inspection of the employer's I-9 forms by an inspecting entity, the inspecting entity makes a determination that the employee's work authorization documents do not establish that the employee is authorized to work in the United States and provides the employer with notice of that determination, the employer shall provide a written notice to the employee within five business days, unless a shorter timeline is provided for under federal law or a collective bargaining agreement.

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INTERNATIONAL UPDATES

Understanding the EU Pay Transparency Directive

At one time largely a U.S. concern, pay equity and transparency have rapidly become globally important to all multinational companies wherever headquartered. The EU Pay Transparency Directive is a milestone adopted with clear objectives: closing the gender pay gap and making it easier to bring equal pay claims.

The 24 Member States have until June 7, 2026, to implement the Directive into their own law. Businesses should begin taking appropriate action now to ensure compliance. Powerful enforcement mechanisms back the Directive’s new reporting requirements.

The Directive came into force on June 7, 2023, introducing new employer obligations:

1. 1. Disclose salaries at recruitment.
   2. Comply with employee requests for pay data.
   3. Publish gender pay gap statistics.
   4. Face compulsory audits and penalties when unjustified discrepancies come to light.

Although the Directive will only apply directly to EU Member States, and non-EU employers that employ individuals in the EU, it will undoubtedly raise expectations of pay transparency across Europe and globally. This will impact employee expectations and the war for talent, as well as expectations of customers and shareholders that value environmental, social, and governance strategy and practices.

Employers should prepare for compliance with the new rules. For most multinational organizations, this will take significant time.

Key Elements

Under the Directive:

1. 1. Pay transparency prior to employment: the recruitment procedure. Employers will be required to provide jobseekers information on an initial pay range based on objective, gender-neutral criteria.
      
      
   2. Pay transparency during employment and the right to information. Employers will be required to provide existing employees with transparency on pay setting and their pay progression policy. The criteria must be easily accessible, and employees have the right to request and receive information on their individual pay and average pay levels, broken down by gender, for categories of workers performing the same work or of equal value.
      
      
   3. Reporting obligations. Employers with at least 100 employees must provide a monitoring body, as well as their employees, data required for the reporting obligation. This includes median gender pay gap, the gender pay gap in variable components (such as bonus or additional benefits), and proportion of female/male workers in each quartile pay band.
      
      
   4. Joint pay assessment. Employers who are subject to pay reporting must conduct a joint pay assessment in cooperation with their workers’ representatives.
      
      
   5. Remedies and enforcement. Employees have a right to request a full, real, and effective compensation or reparation if they have suffered damage as a result of an infringement of any right or obligation relating to the principle of equal pay. Member States may also establish sanctions, including fines, for infringements of the equal pay rule.

Canada Initiatives

Canada has addressed pay transparency in several of its provinces. As of the date of this article, the provinces of British Columbia, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island have passed some form of pay transparency legislation.

In particular, in British Columbia, all employers with at least 1,000 employees will be required to post pay transparency reports that include organizational data on gender, salary, hours worked, bonus pay, overtime pay, and overtime hours worked by November 2024. (For employers with at least 300 employees, the deadline is November 2025, and November 2026 for employers with at least 50 employees.) In addition, as of May 2023, all British Columbia employers:

• • Must include expected pay range in public job postings;
  • Cannot ask job applicants their pay history; and
  • Cannot retaliate against employees who ask about pay or reveal pay to other employees or job applicants.
  • Similar legislation is under consideration in the province of Ontario.

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Report offers drafting recommendations for EU's general-purpose AI Code of Practice

With the drafting of a key piece of the EU Artificial Intelligence Act's enforcement mechanism slated to begin at the end of September, thousands of entities are looking to shape how that process is developed.

The AI Office has just nine months to write the code of practice, which will govern general-purpose AI across the bloc. With such a relatively short period of time, a new report commissioned by the Computer and Communications Industry Association argues drafters should be careful not to repeat the mistakes of regulators in the past.

That means making sure the code's scope is appropriate to the regulation and the AI Office remaining engaged in the drafting process. Those points are among 10 recommendations Wilson Sonsini Goodrich & Rosati's Yann Padova and Sebastian Thess outlined in the CCIA report regarding how to create a governance scheme that will have ramifications across the world.

The report provides a window into how some of the most prominent members of the industry want that drafting process to go.

"As the participation in and adherence to the (AI Act) code is voluntary, the procedure of drawing up the AIA code and its content need to be attractive to ensure the code's success," the report states. "Otherwise, there is a risk that (general-purpose AI) providers will not participate and rely on their in-house compliance solutions instead."

Despite the code's voluntary participation, providers will have to show other means of complying with the AI Act if they do not sign it. Eschewing the code in favor of internal compliance practices means greater risk of fragmentation rather than consistent application — an issue which would likely mean legal battles down the road.

The stakes are high because of who is affected by the code. General-purpose AI systems can have a variety of uses, sometimes outside the developers' intentions. Occasionally referred to as "foundation models," these systems serve as the blueprint for other, more targeted AI products. Search engines built on ChatGPTs large language model are just one example.

Kasper Peters, the head of communications for CCIA Europe, said commissioning the report to inform the industry group's input on the code felt critical because of the time frame for when the codes would come online.

"Finalizing a code of practice on a frontier technology like GPAI in only a couple months is an unprecedented exercise," he said. If the drafting process falls short, Peters indicated "it could mean less innovation and reduced availability of cutting-edge AI technology for EU consumers and businesses."

The AI Office held an open call for interested parties to submit input on how the codes should be written, attracting nearly a thousand applicants.

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Conclusion

As compliance landscapes evolve, it’s imperative for businesses to stay informed and proactive in addressing regulatory changes. These updates, ranging from cannabis policy to AI guidelines and biometric privacy, reflect ongoing shifts that may affect your business operations.

To ensure your organization is prepared, speak with a Cisive expert today about streamlining background screening processes and staying ahead of regulatory developments.