While people across the nation often look askance at what happens in California – and in the California Legislature – when it comes to workers’ compensation, there are events playing out in the Golden State that should literally have everyone involved in the workers’ compensation environment take pause. This is the curious case of Assembly Bill 1651 (Kalra), which in its final form had a remarkably short shelf life. At least as a bill.
Dubbed the “Workplace Technology Accountability Act”, this piece of legislation borrowed heavily from previous attempts to regulate automated decision systems (ADS) within the context of a wide range of applications centered on the employer-employee relationship. While AB 1651 will not move forward in the 2022 legislative session, its provisions – and the response of a broad coalition of business interests – should generate sober reflection amongst the InsurTech, Insurer, and Claims Administrator circuit.
It won’t. But it should.
The number of battlegrounds where the fight over ADS, employee productivity monitoring, health care monitoring through wearables, safety monitoring, human resources applications, and GPS use are many and complex. This litany of technological wonders includes areas where only regulators and a few state legislatures have started to explore – the use of Big Data, AI, and monitoring technology in insurance claims and underwriting.
The uses of these technologies can be very beneficial both for employers and employees. They can also accumulate a large amount of personal information, not all of which is relevant to job duties and not all of it resides with the employer who is using the technology. That in one of the issues framed in both AB 1651 and the California Consumer Privacy Act of 2018 (CCPA).
Another issue more to the point in AB 1651 is bias claimed to be inherent in the data that feeds AI and machine learning. This is not a new issue to the California Legislature or to the nation at large. At the national level, efforts in Congress and many states to deal with bias issues have stalled as well. The National Association of Insurance Commissioner’s got as far as issuing a document, “Principles for the Use of Artificial Intelligence in the Insurance Industry” in 2020. The NAIC could not get to the point of actually mentioning “bias”, but did approve this language:
“Consistent with the risk-based foundation of insurance, AI actors should proactively engage in responsible stewardship of trustworthy AI in pursuit of beneficial outcomes for consumers and to avoid proxy discrimination against protected classes.”
That would seem to go the long way to get to the bias issue, but a good deal of time and energy was spent at the NAIC trying to convince that august body to use words insurers, vendors, and other “AI actors” were familiar with given their unique vocabulary. The NAIC through its Big Data and Artificial Intelligence Working Group continues to examine the best way for regulators to implement their principles.
AB 1651 raises yet another issue. As amended, the bill would have required every employer, prior to using a productivity system that uses algorithms, to submit a summary of the system to the Labor and Workforce Development Agency and to the Division of Occupational Safety and Health for review.
The apparent nexus between technology, particularly productivity applications using algorithms, and workplace safety is the latest wrinkle in the saga of how to regulate technology and by whom.
This is not the last we will hear about these issues in 2022. The California Privacy Protection Agency (CPPA) has been asked to look at bias in AI. More to the point, the employee personal information exception in the CCPA sunsets this year. How, or if, it will be extended depends on negotiations which have yet to produce language for a bill.
If AB 1651 is any indication, we are in for a long and possibly contentious debate over the coming months.
Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.