AI Recruiting: A Guide for Employers (2025)

The use of AI in hiring and recruitment has rapidly increased with more companies than ever adopting tools to screen resumes, automate repetitive processes, and help with many aspects of the hiring process.

If you’re an employer thinking about implementing AI recruiting and hiring tools, you must understand both the potential benefits and drawbacks of these tools.

Based on our experience helping companies streamline recruiting, we’ve written this guide explaining the benefits and challenges of AI recruiting and hiring tools and the laws that apply.

How AI Transforms Hiring: Key Benefits for Recruiters

While the adoption of AI in hiring and recruitment remains in the nascent stage, companies across industries continue to adopt it.

According to the 2024 AI in Hiring Survey, 62.5% of companies reported they use AI in some form during hiring.

Artificial intelligence improves hiring productivity and efficiency.

It allows recruiters to focus on strategic functions rather than repetitive administrative tasks.

Here are some of the most important benefits of AI in hiring and recruitment:

1. Faster Time-to-Hire

Through automation, AI can significantly reduce the time-to-hire.

Recruiters can use AI to identify qualified candidates, screen them, and schedule interviews with those who meet at least the minimum requirements for the role.

A faster time-to-hire reduces candidate ghosting and improves the candidate’s experience with your hiring process.

2. Better Candidate Matching

AI can quickly scan large volumes of resumes to match potential candidates to the criteria your company lists in its job descriptions.

Instead of spending hours combing through hundreds of resumes to find what might seem like a needle in a haystack, recruiters can then focus on the qualifications of the candidates AI has identified as matching the job’s requirements.

3. Improved Candidate Experience

AI-driven applicant tracking systems (ATS) and chatbots allow your team to respond to candidates’ questions when they arise.

The ability to respond to candidates’ queries immediately can help candidates feel more engaged with the process.

Reduced waiting times can also help applicants experience less frustration and give them a more positive view of your company.

4. Automation of Repetitive Tasks

Recruiters can use AI tools to automate repetitive tasks, including scanning resumes, identifying qualified candidates, scheduling interviews based on shared calendars, and answering candidates’ questions.

HR teams’ freed-up time can be used to focus on strategic functions that help propel their organizations forward.

5. Reduced Bias in Hiring

While businesses are increasingly aware of the negative impact that unconscious bias can have on hiring, recruiters’ preconceptions about candidates based on irrelevant factors can creep in and influence hiring decisions.

Bias in hiring leads to poor hiring decisions that can damage a company’s performance and reputation.

When used correctly, AI tools can counteract and reduce bias and make the hiring process more objective.

Recruiters can use AI tools to anonymize candidate information and assess applicants based on their experience and skills.

This can remove the hiring process’s subjectivity and lead to a more equitable hiring process.

6. Increased Productivity

When recruiters rely on AI tools to automate repetitive tasks, they can focus on building relationships and engaging in more strategic efforts for recruitment.

HR hiring teams can spend more time interviewing pre-screened, qualified candidates, assessing cultural fit, and increasing employee engagement.

7. Improved Scalability

Organizations that experience peak seasons must efficiently scale hiring to meet their needs.

Using an AI-driven hiring platform allows businesses to manage large influxes of applications and make faster, informed hiring decisions.

Better hiring scalability is important for industries such as retail and hospitality that must quickly fill large numbers of positions due to seasonal demand changes.

How to Use AI in the Recruitment Process

Sourcing Candidates

Recruitment teams can use AI to scan job boards, databases, and sites like LinkedIn to identify qualified candidates.

With the help of AI, recruitment teams can rely on AI to automatically handle job advertisement creation and distribute them to social media sites and online job boards, including industry-specific job sites.

Some recruitment tools, including ZipRecruiter’s AI, have embedded AI to identify key requirements in a job advertisement, scan its internal resume database, and invite suitable candidates to apply.

Tools like HireEZ can scan profiles and identify individuals from underrepresented groups to improve diversity.

HirEZ also masks identifiers such as names, photos, schools, and addresses to allow recruiters to focus on candidates with skills that match the job’s requirements.

Engaging Candidates with AI Chatbots

Companies can implement AI chatbots like Jobvite to answer common questions and schedule interviews.

While recruiters can’t be available 24/7, AI chatbots can. This round-the-clock availability improves candidates’ experience.

AI chatbots use natural language processing to answer candidates’ questions. A side benefit is that recruiters can spend more time on other priorities rather than answering requests.

Candidates can receive information about available jobs, compensation, benefits, and the steps in your hiring process.

The AI chatbots can also assist candidates during the application process, screen them, and schedule interviews.

Leveraging Predictive Analytics

Predictive analytics analyzes past hiring trends and HR data to predict when events will occur.

This can help organizations act to adjust their recruitment strategies based on predictions.

For example, Greenhouse Predicts uses machine learning to analyze historical data, which helps companies evaluate when they will extend job offers and when the chosen candidate will start.

This information helps companies identify when hiring bottlenecks might occur and adjust their hiring strategies.

Tools like HireEZ can be used to predict the likelihood a candidate will succeed in a role before hiring.

However, your company shouldn’t solely rely on predictive analytics since the predictions are not always accurate.

Instead, use these tools to manage your time and gain realistic expectations of how long it might take to fill an open position.

Streamlining Interviews

Companies use AI interview tools like HireVue, LeverTRM, and Otter.ai to schedule interviews, transcribe meetings, plan interview questions, and provide post-interview summaries.

For example, companies might use LeverTRM to automatically email available times to candidates so they can choose what works for them.

The candidate’s selection can then be synced across all stakeholders’ calendars.

Companies might also use generative AI tools to develop possible interview questions based on their job descriptions.

You might use Otter.ai to transcribe interviews and produce summaries so that you can focus on talking to the candidates instead of taking notes.

Using AI for Faster and More Accurate Background Checks

Experienced background check companies like iprospectcheck use AI to retrieve data in combination with the input of a human quality assurance team.

We use AI to identify relevant data and filter it to improve the speed and accuracy of your background checks.

Our combination of AI tools and skilled human oversight allows us to provide faster, more accurate background checks.

This can help your company enjoy a smoother onboarding process.

Increasing Onboarding Efficiency

Some organizations use AI onboarding platforms like Sapling or Enboarder to personalize the process.

AI tools improve efficiency in document management, gathering feedback, enrolling new hires in training, and providing support.

AI onboarding tools can help you personalize a candidate’s learning pathway to help them succeed from the start.

Challenges of AI in Recruiting

Treat AI as a valuable component of your recruitment strategy, but don’t over-rely on it.

AI algorithms sometimes make mistakes, overlook critical data, and adopt biases in the data used to train them. In some cases, AI can introduce security and privacy concerns.

Your organization must be cognizant of the following challenges of AI in recruitment:

1. Bias and Fairness

AI can reduce bias in recruiting when you use it correctly. However, AI algorithms learn based on the data used to train them.

If the data contains biases, the algorithms can replicate them.

For example, if all of the resumes fed into an AI screening tool belong to male candidates, the algorithm might search for men when it creates candidate shortlists.

This can result in legal liability.

For example, a man filed a lawsuit against an AI screening tool company in 2023, alleging that the software included biases in its algorithms against candidates over 40, disabled, or non-white.

2. Data Privacy Concerns

AI systems require large volumes of data for effective algorithms. However, the use of this data can lead to data privacy problems.

Companies may use personal candidate information to train an algorithm to search for similar information from future candidates. However, the system might use the information unethically or store it for too long.

Companies that use AI in recruitment must know how the data is stored, used, and processed by the technology.

They must implement appropriate data safeguards to prevent breaches, legal liability, and reputational harm.

For example, companies should limit data-sharing, implement multi-factor authentication for access, continuously monitor for suspicious activity, and anonymize all sensitive information used in training sets.

3. Over-Reliance on AI

Your company must avoid over-reliance on AI in hiring.

You shouldn’t replace human recruiters with AI. AI tools are there to assist humans.

Without human oversight, your company could reject high-quality candidates because of the limitations that come with AI algorithms.

4. Ethics, Transparency, and Accountability Concerns

AI implementation in recruitment remains a relatively new concept, and many candidates don’t trust hiring decisions made with the help of AI.

A Pew Research Survey found that 66% of Americans stated they wouldn’t apply for a position with an employer that uses AI to make hiring decisions.

Beyond a lack of trust, privacy concerns exist with the use of AI to screen personal data.

Companies must also be prepared to take accountability when something goes wrong with their AI system.

For example, if an AI tool makes mistakes when screening and shortlisting candidates, the company can be held accountable for those errors.

Legal Compliance

Using AI in hiring doesn’t obviate the need to ensure legal compliance. You must comply with the following laws during your hiring process:

Federal Laws

Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act of 1964 prohibits unlawful employment discrimination based on an applicant’s or employee’s race, national origin, color, religion, or sex.

Amendments to this law have added additional protected statuses, including disability, pregnancy, genetic information, age (40 and over), and citizenship status.

When employers use AI in hiring, they must ensure they comply with Title VII.

Shortly after President Trump issued an Executive Order on AI, the Equal Employment Opportunity Commission (EEOC) removed previous guidance on the use of AI in employment from its website.

The executive order was meant to boost AI and minimize restrictions on its use by restricting limitations placed on it.

However, employers should take caution to ensure their AI tools do not introduce bias into the hiring process to avoid potential liability risks.

AI hiring must still comply with Title VII and its prohibition against employment discrimination.

An executive order does not change employers’ requirements under Title VII.

Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a major consumer privacy law that protects the privacy of consumers in the information third-party consumer reporting agencies (CRAs) gather, store, and disseminate to others, including employers.

This law requires employers to notify applicants and employees that they conduct background checks and obtain their written consent before initiating them.

According to Consumer Financial Protection Bureau (CFPB) Circular No. 2024-26, employers that use third-party companies that use algorithmic scoring with AI must adhere to the FCRA’s notice and consent requirements.

They must also comply with the adverse action process if they decide not to hire someone based on the information.

State Laws

NYC Local Law 144

2021 NYC Local Law 144 prohibits New York City employers from using AI employment tools to make hiring decisions unless the following applies:

• The employer has conducted a bias audit of the tool no more than one year before making a hiring decision.
• The employer has published a summary of the results of the bias audit on their employment website.
• The employer notifies all applicants that it uses AI employment tools to screen candidates no less than 10 days before using them, the types of data collected, how it is used, how it is stored, and the characteristics and qualifications the AI tool uses to screen candidates.

Amendment to the Illinois Human Rights Act

On Aug. 9, 2024, Illinois Gov. J.B. Pritzker signed HB 3773 into law, which will go into effect on Jan. 1, 2026.

This law amends the Illinois Human Rights Act to regulate the use of AI tools in employment and credit decisions.

Under this law, employers will be prohibited from using AI tools that result in unlawful discrimination in all aspects of employment, including recruitment and hiring.

It also requires employers that use AI tools to disclose their use and what they do to job applicants and employees.

Illinois Artificial Intelligence Video Interview Act

The Artificial Intelligence Video Interview Act (AIVIA) regulates employers that use AI to analyze video interviews.

Under this law, employers that ask applicants to record video interviews and then use AI tools to analyze them must first disclose that they use AI and obtain the applicant’s written consent.

The disclosure must include information about the characteristics the AI analyzes and searches for.

Employers are also prohibited from sharing applicant videos.

Colorado Artificial Intelligence Act

Colorado has also passed a law to restrict how employers use AI tools in employment decisions.

The Colorado Artificial Intelligence Act (CAIA) will be effective on Feb. 1, 2026.

This law is the broadest in scope in the U.S. for regulating AI used in employment, healthcare, finance, housing, and other sectors.

The CAIA requires users of AI tools, including employers, to complete impact assessments of AI systems to reduce the potential of algorithmic discrimination.

The impact assessment must include a statement of the AI tool’s purpose and intended use, an analysis of the risks of discrimination, and a description of the data used and produced.

Colorado employers should comprehensively assess their AI systems to ensure compliance when the CAIA becomes effective.

California’s Potential Regulations for Automated Decision-Making Authority

The California Privacy Protection Agency (CPPA) published draft automated decision-making regulations in March 2024.

On Nov. 8, 2024, the CPPA Board voted to begin formal rulemaking on these draft regulations.

While the final rules have not yet been issued, they share similarities to New York City’s Local Law 144.

The California draft regulations would require pre-use notice to applicants and employees before employers use AI tools for employment decision-making, conduct bias audits, and permit applicants to opt out of their use in major employment decisions.

Trust iprospectcheck as Your Partner in Fair, Fast, and Accurate Hiring

AI in hiring can improve recruitment processes and increase efficiency.

However, AI is not a substitute for human insights and should be used in combination with human efforts instead of by itself.

At iprospectcheck, we can also help streamline your hiring process by providing fast, accurate, and comprehensive employment background checks.

To learn more about our background checks and receive a free quote, contact us today: (888) 509-1979.

DISCLAIMER: The resources provided here are for educational purposes only and do not constitute legal advice. Consult your counsel if you have legal questions related to your specific practices and compliance with applicable laws.