Employers are also facing a different AI-related problem within recruitment and hiring: rapidly increasing numbers of applications prepared or submitted through generative AI and automated tools.

On August 4, 2026, the U.S. Department of Justice (DOJ) announced a combined $3.2 million settlement with OpenAI OpCo LLC and its subsidiary Statsig Inc. resolving allegations that the companies discriminated against U.S. workers during recruitment for positions connected to the permanent labor certification (PERM) process, highlighting renewed federal scrutiny of PERM recruitment. A separate February 2026 settlement with Elegant Enterprise-Wide Solutions Inc. further demonstrates that employers remain responsible when artificial intelligence produces or influences potentially discriminatory recruitment practices.

As employers increasingly use AI to perform employment functions such as drafting job postings, screening applicants and managing growing volumes of automated or AI-generated applications, companies should evaluate whether their recruitment technology is consistent with immigration and employment discrimination laws at the federal, state and local levels.

DOJ’s OpenAI Settlement

According to DOJ, OpenAI and Statsig did not post job openings for PERM positions on their external career websites, even though other job openings were routinely posted there. Both companies also required applicants for PERM positions to mail paper applications, while accepting electronic applications for other positions. DOJ further alleged that other PERM-related recruitment practices discouraged applications, including advertising PERM job openings on the radio late at night.

Under the settlement, OpenAI agreed to pay $1.2 million in civil penalties, establish a $2 million back-pay fund, revise its PERM recruitment processes (including posting PERM positions on its public career website and accepting electronic applications) and comply with government monitoring and reporting requirements.

Fewer than 10 PERM positions were at issue, underscoring DOJ’s intention to seek maximum civil penalties even in cases involving a limited number of positions. In light of this settlement and the broader enforcement environment, employers of all sizes should proactively evaluate their current PERM recruitment processes and work with counsel to make any necessary adjustments to ensure compliance with applicable legal requirements and trends.

This was the 13th settlement since DOJ relaunched its Protecting U.S. Workers Initiative in 2025.

An Established and Expanding Enforcement Pattern

The OpenAI settlement follows several significant PERM-related enforcement matters:

• In 2023, Apple agreed to pay up to $25 million to resolve allegations that it discriminated against U.S. workers by not posting PERM positions on its external career website, requiring paper applications and failing to consider certain electronically submitted applications for PERM-related job openings.
• In April 2026, DOJ filed a lawsuit against software firm Cloudera, alleging that the company discriminated against U.S. workers by creating a separate recruitment process for PERM positions and instructing applicants to use an email address that could not receive external applications. While litigation remains ongoing, in May 2026, the Department of Labor (DOL) suspended processing of all pending Cloudera PERM applications for 180 days.

These matters along with other DOJ enforcement actions demonstrate that regulators may compare an employer’s PERM recruitment methods with its ordinary hiring practices. Separate application channels, less accessible postings or additional procedural barriers may attract scrutiny even when the employer complies with the minimum advertising steps as required under the PERM regulations.

Finally, as covered in a previous Alert from 2024, the private plaintiff class action bar has followed the government’s lead in seeking to target and pursue enforcement measures against companies that discriminate against U.S. workers in favor of foreign visa workers. For instance, a former employee of Tata Consultancy Services Ltd. filed a class action lawsuit against the company alleging that it terminated American workers at its U.S. locations to replace them with foreign workers on temporary visas. For businesses seeking to replace U.S. workers with temporary visa holders, the risk of potential class action lawsuits on the basis of national origin discrimination has manifested into bet-the-company, headline-grabbing litigation.

AI Does Not Shift Responsibility

Two complementary legal regimes apply. Under 20 C.F.R. § 656.10(c)(8)–(9), a PERM position must be clearly open to any U.S. worker, and U.S. workers may be rejected only for lawful, job-related reasons. Separately, 8 U.S.C. § 1324b prohibits certain citizenship-status and national-origin discrimination in hiring and recruitment. Accordingly, compliance with DOL’s minimum PERM advertising requirements does not necessarily eliminate potential exposure under the Immigration and Nationality Act’s (INA) anti-discrimination provisions.

Employers are increasingly turning to AI-powered tools to streamline hiring and recruitment processes. These technologies can automate job postings, screen applications and generate candidate communications at scale. However, the adoption of AI in recruitment introduces potential significant legal risks. When AI systems produce content or make screening decisions that reflect unauthorized citizenship-status or national-origin preferences—whether through algorithmic bias, flawed training data or inadequate human oversight—employers may face liability under the INA regardless of whether the discriminatory output was intentional.

The DOJ’s February 2026 settlement with Elegant Enterprise-Wide Solutions Inc. illustrates these risks. In that matter, DOJ alleged that job advertisements generated by an AI tool contained unauthorized restrictions based on visa status, limiting consideration to applicants holding H-1B, OPT or H-4 work authorization. The settlement underscores that employers remain responsible for all hiring-related communications—regardless of whether they are drafted by human personnel or generated by AI.

Screening AI-Generated and Automated Applications

Employers are also facing a different AI-related problem within recruitment and hiring: rapidly increasing numbers of applications prepared or submitted through generative AI and automated tools. These applications may contain standardized language, duplicate submissions, exaggerated qualifications or information that is difficult to verify. The volume of such submissions creates significant administrative burdens, including difficulty distinguishing authentic applications from automated responses, increased processing demands on human resources personnel and challenges in maintaining complete and accurate recruitment records required for PERM audit purposes.

These administrative challenges do not modify the PERM standard or permit any reduction in the rigor of application review. The use of AI to prepare or submit an application does not, by itself, relieve an employer of its obligation to assess whether a U.S. worker applicant is potentially qualified under the applicable PERM standard. An applicant should not be rejected merely because a résumé appears to have been prepared using AI or submitted through an automated process. The employer must still determine whether each applicant satisfies the specific stated minimum requirements for the PERM position or could acquire a missing skill through a reasonable period of on-the-job training.

AI-enabled screening may create additional risk when a system:

• Rejects applicants based on keywords, formatting, employment gaps or inferred characteristics rather than the stated PERM requirements;
• Applies qualifications that were not disclosed in the PERM advertisements;
• Treats applicants for PERM positions differently from applicants for comparable non-PERM positions;
• Screens applicants based on citizenship or visa-status terminology; or
• Does not retain sufficient information to reconstruct and explain an individual rejection.

Employers should also remember that AI screening tools must comply not only with PERM and INA requirements, but also state and local regulation of automated hiring tools as well as broader federal anti-discrimination standards, creating multiple overlapping compliance obligations that require careful coordination.

These AI-related screening risks are not unique to the PERM context. The Equal Employment Opportunity Commission (EEOC) issued guidance in 2022 and 2023 reinforcing that existing federal employment-discrimination laws apply even when an automated system participates in hiring decisions. Although the EEOC later withdrew that guidance as potentially “out of date,” federal employment laws remain fully applicable to AI-driven hiring. For example, employers may face disparate-impact liability when AI tools utilized in hiring disproportionately exclude or disadvantage a protected group, even if the company had no intent to discriminate. Likewise, the Americans with Disabilities Act (ADA) imposes liability on employers whose AI applicant review programs screen out candidates based on disability-related characteristics, for example video analysis or timed responses that inadvertently screen out qualified individuals with disabilities. Employers must also ensure that their automated systems can accommodate applicants who request reasonable accommodations during the application process. Many state fair employment laws provide protections broader than their federal counterparts, covering additional protected classes or applying to smaller employers. AI-driven screening decisions that produce disparate impact may trigger liability under these statutes independent of any federal claim.

Recent litigation further underscores the breadth of employment-discrimination exposure arising from AI screening tools. In Harper v. SiriusXM Radio, LLC (E.D. Mich. 2025), a class action alleges that AI-powered applicant screening tools discriminate against African American applicants by relying on data points that serve as proxies for race, asserting claims under both Title VII and 42 U.S.C. § 1981. In Mobley v. Workday, Inc. (N.D. Cal. 2023), plaintiffs challenged the AI platform provider itself, alleging disparate impact based on race, sex, age and disability; a conditional Age Discrimination in Employment Act (ADEA) collective action has attracted over 15,000 opt-ins.

For employers conducting PERM recruitment, this means that AI screening tools must comply not only with PERM and INA requirements, but also with broader federal anti-discrimination standards, including Title VII, the ADEA, the ADA, Section 1981 and analogous state fair employment laws—creating multiple, overlapping compliance obligations that require careful coordination.

These cases remain pending, and the allegations have not been finally adjudicated. Nevertheless, they illustrate potential exposure for both employers and technology providers when automated tools materially participate in employment decisions.

Navigating Overlapping Compliance Obligations

Employers sponsoring workers through the PERM labor certification process face a challenging compliance landscape. DOL’s PERM regulations impose strict procedural requirements governing job advertisements, recruitment steps and documentation, all designed to test the labor market and demonstrate that no qualified U.S. worker is available for the position. At the same time, DOJ’s Immigrant and Employee Rights Section enforces anti-discrimination provisions of the Immigration and Nationality Act, which prohibit citizenship-status and national-origin discrimination in recruitment and hiring. This creates an inherent tension: Certain recruitment practices undertaken to satisfy PERM requirements, such as specific language in job postings, narrow applicant screening criteria or separate application procedures may inadvertently trigger DOJ scrutiny if they appear to discourage or exclude U.S. workers.

The increasing use of AI tools in hiring adds a further layer of complexity, as automated systems may inadvertently produce discriminatory outputs or screening decisions that expose employers to liability under both regulatory frameworks.

Given the complexity of these overlapping obligations, employers should work closely with experienced counsel to design PERM recruitment processes that satisfy DOL’s procedural requirements while remaining fully compliant with DOJ anti-discrimination standards. Proactive legal guidance can help employers avoid common pitfalls, maintain defensible documentation and reduce the risk of enforcement actions.

What This Means for Employers

Employers using AI or automated tools in the PERM recruitment context should consider the following:

1. Use substantially comparable application methods for PERM and ordinary recruitment.
2. Post PERM openings on the company’s public career site when comparable positions are ordinarily posted there.
3. Require meaningful human review before an applicant is rejected through automated screening.
4. Configure screening criteria to match the stated PERM requirements exactly.
5. Review AI-generated advertisements for unauthorized citizenship or visa-status restrictions.
6. Document individualized, lawful and job-related reasons for each rejection.
7. Preserve applications, screening results, system configurations, communications and audit trails.
8. Continue to thoroughly evaluate all eligible applications to determine if a candidate is potentially qualified, even if the application appears to be automated or AI-assisted.
9. Audit recruitment vendors and applicant-tracking systems rather than relying solely on vendor assurances.
10. Determine whether state or local bias-audit, notice, accommodation or disclosure requirements apply.
11. Coordinate immigration counsel, employment counsel, human resources, recruiters and technology teams before beginning recruitment.

The recent enforcement actions demonstrate that PERM recruitment cannot be treated as a technical advertising exercise. As AI becomes more involved on both sides of the application process, employers must be prepared to show that their recruitment was accessible, nondiscriminatory, conducted in good faith and supported by a reliable record of individualized decision-making.

For More Information

If you have any questions about this Alert, please contact M. Alejandra Vargas, Alex W. Karasik, Olivia Scofield, Charlotte Drew, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.