Algorithmic Bosses Can’t Lie! How to Foster Transparency and Limit Abuses of the New Algorithmic Managers

Abstract

Technology is changing the way entrepreneurs manage their human resources. Many employers have already started to dismiss the completely human exercise of their managerial prerogatives, totally or partially delegating them to more or less smart machines. Data collected through people or workforce analytics practices are the fuel to fill the tank of algorithmic management tools, which are capable of taking automated decisions affecting the workforce. Notwithstanding the advantages in terms of increased labour productivity, recurring to technology is not always risk-free. It has already happened, also in the HR management context, that algorithms have revealed themselves as biased decision-makers. This problem has often been exacerbated by the lack of transparency characterising most part of automated decision-making processes. Moreover, this issue is worse in the employment context because it increases the already existent information asymmetries between entrepreneurs and workers. These are the main reasons why it has been underlined how workforce analytics and algorithmic management practices may implicate an augmentation of managerial prerogatives unheard in the past. It has also been stressed that this should entail an update – or even a rethinking – of employment laws that, as they are today, may be inadequate to address the issues posed by the technological revolution.

This paper tries thus to understand, mainly looking at the Italian and other EU civil-law based legal systems, whether there are rules that may foster transparency and prevent abuses of employers’ managerial prerogatives potentially arising from the increasing recourse to algorithmic management practices. More specifically, this article points to three types of regulatory techniques that may alleviate the abovementioned issues. These three regulatory techniques are: a) information and access rights, to be exercised before a claim has been brought with a view to gather evidence to be used within a trial; b) rules that, within a trial, totally or partially switch the burden of proof to the employer or set presumptions in favour of the employee; and c) rules that, within a trial, grant employment judges with broad powers to gather evidence.

All these regulatory techniques strongly incentivise employers to recur to only those algorithmic tools with a decision-making process that can potentially be made transparent to their employees and, in case of a trial, to employment judges. Therefore, the employment legal system already knows how to foster transparency in the workplace and consequently uncover the violation of rules that already limit abuses of managerial prerogatives by employers. In light of the pervasive use of new technological tools to manage human resources, a more massive recourse to these regulatory antibodies can constitute an effective policy recommendation to better face the challenges posed by the algorithmic revolution.

Keywords: automation, artificial intelligence, AI, algorithms, algorithmic transparency, algorithmic management, people analytics, gig economy, labour protection, privacy, data protection, GDPR, information and access rights, burden of proof, presumption, discrimination, workers, algorithmic litigation

JEL Classification: J7, K31, K41, M12, M15, M54