Supply chain employers are inundated by advertisements for AI technologies claimed to improve efficiency and simplify operations. Tools such as AI-powered scheduling platforms, productivity-monitors, automated timekeeping, and predictive workforce analytics are offered as easy solutions to improve efficiency and accuracy within a workforce.
Supply chain employers, in particular, increasingly use AI and automated technologies to predict staffing needs, create schedules, monitor productivity and active working time, track employee location, capture worked hours, assign tasks, and evaluate performance. While such innovations can certainly offer significant operational benefits, employers must be mindful of the wage and hour compliance risks that accompany these tools. Plaintiffs' attorneys, labor departments, and courts routinely scrutinize AI employment practices: companies must be proactive when it comes to implementing tools that may impact evaluation, compensation, timekeeping, scheduling, and recordkeeping.
At the end of the day, an employer remains responsible for every decision made, regardless of how or to what degree it was informed by AI.
One of the most significant compliance challenges arises from timekeeping practices informed by AI. Unlike the Bundy clock historically associated with the beginning and end of a shift, modern systems can track employee whereabouts and activities, purporting to capture working time. While these tools may eliminate the line of workers, employers should closely audit tasks that are and are not counted as working time to avoid wage and hour pitfalls.
For example, AI timekeeping tools can miss preliminary and postliminary tasks that courts may find to be compensatory such as gathering tools, sanitizing activities, donning and doffing, vehicle inspections, booting up software, and responding to communications tangential to primary tasks. Similarly, employees are increasingly being asked to use tracking technology, such as smart badges, RFID tracking devices, and productivity devices. These devices, alone, may trigger mandatory pre and post shift activities, such as charging, synchronization, or equipment retrieval activities. If automated systems fail to record these activities, employers may face claims for unpaid wages and overtime.
AI scheduling tools can also improve operational efficiency by matching staffing levels with anticipated demand. However, employers should consider how scheduling algorithms interact with state and local legal compliance. Multiple jurisdictions have enacted predictive scheduling requirements that mandate advance notice of schedules and penalize last minute changes. Employers should ensure that scheduling algorithms incorporate applicable legal requirements rather than focusing exclusively on labor-cost reduction.
AI tools also tout productivity measures, such as packing efficiency, delivery times, idle time, and route adherence. While reasonable monitoring is appropriate, excessive focus on aggressive goals can motivate either unsafe behaviors or off-the-clock work. Employers should ensure that productivity tools are implemented in a reasonable manner that does not encourage skipping required breaks or off-the-clock work. Further, employers should ensure that productivity goals are reasonable within paid working time. Employers are liable not just for the work they authorize, but all work they know or permit to be performed.
Finally, in the wage and hour world, record-keeping is essential. While AI has endless possibilities with respect to the data and records it creates, it is not infallible. The burden remains with the employer to demonstrate that all hours worked were compensated, that pay was accurate, and that the employer honored overrides of the AI system.
So, what is an employer to do? To avoid the pitfalls of wage and hour and regulatory compliance when implementing new technologies, there are a variety of steps employers can take while embracing AI.
First, employers should ensure they have a deep understanding of how the tool operates and be able to explain the basis for all information relied up; a simple “the system told me so” won’t suffice.
Second, employers should conduct wage and hour audits to confirm the AI technology is capturing all compensable time performed by an employee in the course of a shift, including certain pre- and post-shift activities.
Third, employers should develop procedures to ensure that human judgment and decision-making remain integral.
Fourth, employers should heed the “buyer beware” adage and avoid simply relying on vendors representing their tools comply with applicable laws: independent verification is key.
Fifth, employers should always have a mechanism that is clearly and widely communicated for employees to report instances in which the technology was wrong, such as missing pay, timekeeping errors, and system malfunctions.
AI and emerging workforce technologies are increasingly unavoidable in efficient supply chain operations. Employers that ensure human and legal oversight, auditing procedures, and strong communication with their workforce will be best positioned to realize the benefits of AI while minimizing costly litigation and enforcement exposure.
