The future of AI regulation in the employment sphere is in flux, with President Trump's July 23, 2025 AI Action Plan and Executive Orders potentially reshaping the legal landscape. In April 2025, we explored the risks of HR using AI for hiring and performance measurement, highlighting the growing body of laws aimed at protecting employees and candidates from algorithmic discrimination. Since then, the Trump administration's actions have introduced a new layer of complexity.
The Action Plan emphasizes three core pillars: accelerating AI innovation, building American AI infrastructure, and leading in international AI diplomacy and security. Executive Order 14179, a key component, calls for the revocation of AI policies hindering American innovation. While the proposed 10-year moratorium on state and local AI regulations didn't make it into the final bill, the Action Plan still targets state-level regulations.
The federal government's stance is clear: it won't interfere with states' rights to pass non-restrictive innovation laws, but it will withhold AI-related federal funding from states with burdensome regulations. The Office of Management and Budget (OMB) will collaborate with federal agencies to factor in a state's AI regulatory climate when allocating funding. The Federal Communications Commission (FCC) will evaluate how state regulations impact its ability to fulfill its obligations under the Communications Act of 1934.
The Action Plan also emphasizes developing AI systems free from ideological bias and engineered social agendas, recommending the removal of DEI references from the NIST framework. This could significantly impact AI risk management procedures, particularly for companies using the NIST framework. For instance, workforce DEI prioritization might no longer be mandatory in AI risk management.
This development raises crucial questions. Will states like Colorado, which have enacted AI laws, continue to recognize the NIST framework? Or will they require companies using AI for personnel decisions to adopt frameworks prioritizing workforce diversity? The potential consequences are far-reaching, with federal agencies potentially limiting or eliminating funding for states that don't comply.
Employers utilizing AI in personnel decisions must stay vigilant, monitoring AI regulation developments, especially in their operating states, to ensure compliance with federal and state laws. The future of AI regulation is still being written, and these actions will undoubtedly shape it.
