Addressing bias and ensuring compliance in AI systems

As companies rely more on automated systems, ethics has become a key concern. Algorithms increasingly shape decisions that were previously made by people, and these systems have an impact on jobs, credit, healthcare, and legal outcomes. That power demands responsibility. Without clear rules and ethical standards, automation can reinforce unfairness and cause harm.

Ignoring ethics affects real people in real ways, not only changing degrees of public trust. Biased systems can deny loans, jobs, or healthcare, and automation can increase the speed of bad decisions if no guardrails are in place. When systems make the wrong call, it’s often hard to appeal or even understand why, and the lack of transparency turns small errors into bigger issues.

Understanding bias in AI systems

Bias in automation often comes from data. If historical data includes discrimination, systems trained on it may repeat those patterns. For example, an AI tool used to screen job applicants might reject candidates based on gender, race, or age if its training data reflects those past biases. Bias also enters through design, where choices about what to measure, which outcomes to favour, and how to label data can create skewed results.

There are many kinds of bias. Sampling bias happens when a data set doesn’t represent all groups, whereas labelling bias can come from subjective human input. Even technical choices like optimisation targets or algorithm type can skew results.

The issues are not just theoretical. Amazon dropped its use of a recruiting tool in 2018 after it favoured male candidates, and some facial recognition systems have been found to misidentify people of colour at higher rates than Caucasians. Such problems damage trust and raise legal and social concerns.

Another real concern is proxy bias. Even when protected traits like race are not used directly, other features like zip code or education level can act as stand-ins, meaning the system may still discriminate even if the input seems neutral, for instance on the basis of richer or poorer areas. Proxy bias is hard to detect without careful testing. The rise in AI bias incidents is a sign that more attention is needed in system design.

Meeting the standards that matter

Laws are catching up. The EU’s AI Act, passed in 2024, ranks AI systems by risk. High-risk systems, like those used in hiring or credit scoring, must meet strict requirements, including transparency, human oversight, and bias checks. In the US, there is no single AI law, but regulators are active. The Equal Employment Opportunity Commission (EEOC) warns employers about the risks of AI-driven hiring tools, and the Federal Trade Commission (FTC) has also signalled that biased systems may violate anti-discrimination laws.

The White House has issued a Blueprint for an AI Bill of Rights, offering guidance on safe and ethical use. While not a law, it sets expectations, covering five key areas: safe systems, algorithmic discrimination protections, data privacy, notice and explanation, and human alternatives.

Companies must also watch US state laws. California has moved to regulate algorithmic decision-making, and Illinois requires firms to tell job applicants if AI is used in video interviews. Failing to comply can bring fines and lawsuits.

Regulators in New York City now require audits for AI systems used in hiring. The audits must show whether the system gives fair results in gender and race groups, and employers must also notify applicants when automation is used.

Compliance is more than just avoiding penalties – it is also about establishing trust. Firms that can show that their systems are fair and accountable are more likely to win support from users and regulators.

How to build fairer systems

Ethics in automation doesn’t happen by chance. It takes planning, the right tools, and ongoing attention. Bias and fairness must be built into the process from the start, not bolted on later. That entails setting goals, choosing the right data, and including the right voices at the table.

Doing this well means following a few key strategies:

Conducting bias assessments

The first step in overcoming bias is to find it. Bias assessments should be performed early and often, from development to deployment, to ensure that systems do not produce unfair outcomes. Metrics might include error rates in groups or decisions that have a greater impact on one group than others.

Bias audits should be performed by third parties when possible. Internal reviews can miss key issues or lack independence, and transparency in objective audit processes builds public trust.

Implementing diverse data sets

Diverse training data helps reduce bias by including samples from all user groups, especially those often excluded. A voice assistant trained mostly on male voices will work poorly for women, and a credit scoring model that lacks data on low-income users may misjudge them.

Data diversity also helps models adapt to real-world use. Users come from different backgrounds, and systems should reflect that. Geographic, cultural, and linguistic variety all matter.

Diverse data isn’t enough on its own – it must also be accurate and well-labelled. Garbage in, garbage out still applies, so teams need to check for errors and gaps, and correct them.

Promoting inclusivity in design

Inclusive design involves the people affected. Developers should consult with users, especially those at risk of harm (or those who might, by using biased AI, cause harm), as this helps uncover blind spots. That might mean involving advocacy groups, civil rights experts, or local communities in product reviews. It means listening before systems go live, not after complaints roll in.

Inclusive design also means cross-disciplinary teams. Bringing in voices from ethics, law, and social science can improve decision-making, as these teams are more likely to ask different questions and spot risks.

Teams should be diverse too. People with different life experiences spot different issues, and a system built by a homogenous group may overlook risks others would catch.

What companies are doing right

Some firms and agencies are taking steps to address AI bias and improve compliance.

Between 2005 and 2019, the Dutch Tax and Customs Administration wrongly accused around 26,000 families of fraudulently claiming childcare benefits. An algorithm used in the fraud detection system disproportionately targeted families with dual nationalities and low incomes. The fallout led to public outcry and the resignation of the Dutch government in 2021.

LinkedIn has faced scrutiny over gender bias in its job recommendation algorithms. Research from MIT and other sources found that men were more likely to be matched with higher-paying leadership roles, partly due to behavioural patterns in how users applied for jobs. In response, LinkedIn implemented a secondary AI system to ensure a more representative pool of candidates.

Another example is the New York City Automated Employment Decision Tool (AEDT) law, which took effect on January 1, 2023, with enforcement starting on July 5, 2023. The law requires employers and employment agencies using automated tools for hiring or promotion to conduct an independent bias audit in one year of use, publicly disclose a summary of the results, and notify candidates at least 10 business days in advance, rules which aim to make AI-driven hiring more transparent and fair.

Aetna, a health insurer, launched an internal review of its claim approval algorithms, and found that some models led to longer delays for lower-income patients. The company changed how data was weighted and added more oversight to reduce this gap.

The examples show that AI bias can be addressed, but it takes effort, clear goals, and strong accountability.

Where we go from here

Automation is here to stay, but trust in systems depends on fairness of results and clear rules. Bias in AI systems can cause harm and legal risk, and compliance is not a box to check – it’s part of doing things right.

Ethical automation starts with awareness. It takes strong data, regular testing, and inclusive design. Laws can help, but real change also depends on company culture and leadership.

(Photo from Pixabay)

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