ORLANDO, Fla. - Companies that adopt AI for hiring, performance reviews, or layoffs without giving HR a central role in the rollout are courting discrimination lawsuits, data leaks, and intellectual property fights, according to employment attorney Deepa Menon. Speaking at the Society for Human Resource Management (SHRM) annual conference in 2026, Menon said HR, legal, and IT must agree on a governance framework before any AI tool touches employees.
The patchwork of legal risks
AI in the workforce implicates a sprawling set of laws that vary by jurisdiction and change often. Menon, a partner at Eversheds Sutherland, described the U.S. regulatory environment as "a patchwork of laws" that makes compliance exceptionally complex. The first wave of litigation usually centers on bias and discrimination claims - arguments that an automated tool introduced an inherent disadvantage unrelated to a person's qualifications.
Data leakage is another escalating threat. When employees use public generative AI tools without enterprise controls, confidential information and trade secrets can end up training another company's models. Menon pointed to the case of a Samsung engineer who pasted proprietary code into a public GPT platform. "Companies are afraid their data is being used to train other models," she said. "Is data getting mixed up, or are vendors able to keep it separate? How does the company know the data is being kept separate?"
Intellectual property risks multiply when organizations build their own AI models and bring in contractors. If a contractor's data trains the model, disputes can arise over who owns the resulting IP. Inadequate contracts and policies make it harder to defend against these claims.
Why HR must be at the table from day one
Menon said the most damaging rollouts happen when HR is sidelined. "We've generally seen companies run into major challenges when HR was not in the room," she said. Without HR's input, technical teams often overlook the real-world consequences of deployment - how to communicate with employees, what disclosures are required, and how to maintain compliance across jurisdictions.
HR is the first line of defense when employees react to new technology, Menon explained. To earn trust, HR professionals must first understand the tool and believe it serves a legitimate purpose. "HR must be able to explain why, but also how a tool works and what the benefit is," she said. "When HR is not in the room when these workforce AI tools are being adopted, it is put at a disadvantage because the line of communication with employees is impacted."
That communication gap widens with global deployments, where employees in different countries compare notes on what tools are being used and how they are affected. Menon urged HR leaders to work alongside legal counsel to spot ripple effects beyond employment law - a single AI tool can trigger unfair trade practice claims or IP disputes.
The trust deficit and job loss fears
When employees suspect AI is driving layoffs, the underlying issue is often trust, not just the technology itself. "When there's an AI tool rollout, if trust exists, there is less concern among employees because there is an innate understanding the company is trying to make things better for them," Menon said. "Often, when employees raise concerns, it's because that underlying trust is already fractured."
Selective mass layoffs that involve AI create obvious litigation risk, she added, because plaintiffs will ask whether the tool systematically excluded people in a protected category. Even if automation only affects one department, questions about why that department was chosen can fuel legal claims. "Anything could be a litigation risk if it's not implemented uniformly," Menon said.
Menon emphasized that keeping a human in the loop is a critical defense. "You want to ensure there is a human component in there somewhere," she said, "because that will be your biggest defense if there is a claim." Automated systems that remove human judgment entirely raise the bar for employers trying to defend their decisions.
Navigating a wait-and-see regulatory landscape
While federal enforcement may take a hands-off approach, Title VII protections against discrimination still apply, and state-level privacy legislation is accelerating. Menon cautioned against chasing perfect compliance. "100% compliance with every single global AI and privacy law is impossible," she said. "You have to pick the big battles and comply with specific pieces to the greatest extent you can."
She advises companies to perform a constant risk-benefit analysis - weighing the cost of immediate disclosure against the penalty for under-disclosure, and deciding whether to wait for legal clarity in an unsettled area. That calculus is especially pointed when an employee data request in California could double as free discovery for a coming lawsuit. "There are risks associated with over-disclosure and under-disclosure," Menon said.
Why this matters for HR professionals
HR can no longer afford to be a reactive gatekeeper that blocks AI initiatives. Organizations need HR leaders to partner with legal and IT early, setting the rules for how AI tools are selected, tested, and explained to employees. Building trust through transparent communication and preserving human oversight in every automated decision will reduce the risk of litigation and help employees see AI as a tool that supports them, not one that replaces them.
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