How to Protect Your Privacy When Using AI Tools at Work

Artificial intelligence tools are becoming standard in many workplaces—used for screening job applicants, monitoring productivity, and even drafting internal communications. While these tools can save time, they also introduce risks around bias, privacy, and legal liability that employees and managers should be aware of. Recent lawsuits and regulatory moves suggest the landscape is shifting, and understanding your rights and responsibilities is more important than ever.

What happened

In late May 2026, California Governor Gavin Newsom signed an executive order directing state agencies to study the economic impacts of AI and propose safeguards. That same week, a new lawsuit in California pushed the boundaries of AI litigation, potentially signaling a wave of cases involving automated decision-making in the workplace. Separately, courts are split on whether conversations with AI chatbots are protected by attorney-client privilege, which could have implications for employees and employers who use AI for legal or sensitive work.

These developments come from recent articles published by CDF Labor Law LLP, a management-side labor law firm. While the firm represents employers, the risks they describe—bias in hiring algorithms, surveillance through productivity trackers, and legal exposure from AI-generated content—apply broadly to any organization using AI.

Why it matters

For employees, the concern is twofold. First, AI tools used in hiring and promotion can perpetuate bias. Studies have shown that resume-screening algorithms may disadvantage certain demographic groups if trained on historical data. Second, workplace monitoring software—keystroke loggers, webcam analysis, or email scanning—can collect far more personal information than is necessary, often without clear consent.

For managers and employers, the legal exposure is real. Several U.S. cities and states are considering laws that require employers to disclose when AI is used in hiring decisions. In Europe, the AI Act imposes strict requirements on “high-risk” systems, including those used in employment. Lawsuits are also testing whether companies can be held liable for discriminatory outcomes caused by third-party AI vendors. Ignoring these risks could lead to regulatory fines, litigation costs, and reputational damage.

What readers can do

For employees:

  • Ask your HR department what AI tools are used in hiring, performance reviews, or monitoring. Many employers are required to disclose this under state laws like New York City’s Local Law 144.
  • Limit the personal information you share on workplace AI platforms. For example, avoid submitting sensitive health or family details into internal chatbots unless you know how that data is stored and used.
  • Review your company’s privacy policy and employee handbook for sections on data collection or AI use. If you see vague language, ask for specifics.
  • Report any instances where you believe an AI tool treated you unfairly. Some companies have internal channels for bias complaints.

For managers:

  • Conduct an AI impact assessment before deploying any new tool. Map what data it collects, how decisions are made, and whether the vendor provides transparency about the algorithm’s training data.
  • Update your workplace policies to clearly state when and how AI is used. Include an opt-out process where feasible, especially for non-core tasks like personal wellness tracking.
  • Train employees on the limits of AI-generated content. Warn them not to input confidential information into public chatbots and remind them that AI outputs can be flawed or biased.
  • Review contracts with AI vendors to ensure they take responsibility for compliance with anti-discrimination and privacy laws. Do not rely solely on vendor claims.

Sources

  • CDF Labor Law LLP, “AI in the Workplace: Managing Bias, Privacy and Legal Risk,” published June 4, 2026, via JD Supra.
  • CDF Labor Law LLP, “Governor Newsom Signs Executive Order To Confront Economic Impacts of AI,” May 29, 2026.
  • CDF Labor Law LLP, “AI Lawsuit Pushes the Boundaries of AI Litigation—and May Signal a New Wave,” April 15, 2026.
  • CDF Labor Law LLP, “Are AI Chats Privileged? Courts Split on Attorney-Client and Work-Product Protection,” April 2, 2026.

Staying informed and proactive is the best defense. The law is still catching up, but both employees and managers have steps they can take right now to reduce bias, protect privacy, and manage legal risk.