Employers lag on AI risk management as adoption accelerates
Artificial intelligence has become the top workplace policy concern for U.S. employers in 2026, outpacing immigration and diversity issues, according to a survey by law firm Littler Mendelson released Wednesday. The share of employers expecting AI-related regulatory shifts has roughly doubled since last year.
More than half of respondents-54%-said they use AI in HR functions. Only 6% said they don't use the technology anywhere in their organization.
Yet governance hasn't kept pace with adoption. While 68% of employers now have formal AI governance policies, up from 38% last year, fewer than half have implemented basic safeguards: procedures for vetting third-party AI vendors, training specific to AI tools, or an internal AI oversight committee.
Niloy Ray, co-chair of Littler's AI and technology practice group, said employers are "still playing catch-up" on governance. "That mismatch could leave employers vulnerable to significant risk, especially given the complexity around compliance," Ray said.
What employers fear most
Data privacy tops employers' litigation concerns. Employee and candidate data, videos, and images processed by AI systems rank as the primary worry, followed by discrimination claims, state-specific regulations, and recordkeeping requirements.
The survey included more than 300 C-suite executives, in-house lawyers, and HR professionals. It examined job displacement concerns as well: 15% of employers said they've eliminated or plan to eliminate positions because of AI, while 63% said they haven't and don't expect to. More employers reported reducing hiring or reassessing job duties instead.
The compliance challenge ahead
A growing number of states and localities have passed AI regulations, particularly restrictions on AI use in hiring. This conflicts with the Trump administration's push for a lighter regulatory touch on the technology.
Marko Mrkonich, also co-chair of Littler's AI and technology practice group, said managers need technical knowledge, business judgment, and compliance focus to manage AI's workplace impact. "AI is opening new frontiers, redefining job responsibilities, changing the way we hire, and modifying staffing patterns," Mrkonich said. "The old way of doing things is no longer good enough."
Large employers have moved faster on AI transformation, though the survey suggests most organizations are still in early stages of implementation. Littler noted that many employers lack formal review processes for AI tools and haven't established clear policies on what data can be used with specific applications.
For managers, the practical takeaway is clear: AI governance isn't optional. Learn more about AI for Management and AI for Human Resources to understand how to implement these safeguards in your organization.
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