HR consultancy firms are noticing a growing trend of companies turning to AI to generate important employment documents, such as employee handbooks and workplace policies. AI tools like ChatGPT are being used to quickly generate these documents, but HR consultants warn that many of them are overlooking key clauses and crucial issues. This puts employers at serious legal and financial risk, as demonstrated by examples of companies facing unexpected wage bills and higher settlement amounts due to AI-generated errors in their documents.
Although some firms hire HR experts to review their AI-generated policies before publication, others seek professional help only after issues arise. For instance, a California-based firm with 200 employees discovered that their AI-generated company handbook did not include an overtime policy, leading to a costly wage bill when employees worked overtime. In another example, a UK HR team used AI to produce a severance agreement that was deemed useless by the employee’s legal counsel, resulting in a higher settlement amount.
HR consultants emphasize the complexity of handbooks and workplace policies, which are tailored to reflect company culture and local laws. While AI tools can generate a first draft of these documents in seconds, they often rely on outdated training datasets in terms of labor laws. Additionally, there are concerns about privacy if confidential company data is entered into AI models. Overreliance on AI for policy generation can have messy ripple effects, as evidenced by cases where AI tools have produced inaccurate information, leading to the need for manual corrections by HR experts.
While AI is increasingly being used for various HR tasks, such as writing job descriptions and screening candidates, it is not yet accurate enough to generate company policies reliably. HR consultants stress the importance of taking the time to ensure that handbooks and policies are successfully created to avoid legal and financial consequences. The use of AI tools to speed up processes may result in more issues than if the necessary attention and care were given during the initial creation of these important employment documents. It is clear that AI has its limitations when it comes to generating accurate and comprehensive company policies, and companies should consider the risks involved in relying solely on AI for such critical documents.
