The Industry and Public Policy Context of the Texas Responsible Artificial Intelligence Governance Act

Nicole Hinson

Staff Editor 2024-2025

Artificial Intelligence (AI) is a significant technological advancement that has transformed many different industries from national security to transportation.¹ What once was an idea in futuristic television shows and movies has now become integrated into many parts of everyday life, namely, the workplace.² Despite the fast-growing development and use of AI in employment, virtually no guidelines or regulations exist on how AI can be used.³ That is, until December 23, 2024, when Texas House Bill 1709, also known as the Texas Responsible Artificial Intelligence Governance Act (hereinafter referred to as “the Bill”), was introduced to the Texas House of Representatives.⁴ The purpose of the Bill is to encourage responsible development of AI programs, protect people from the risks of using AI, and promote transparency and notice about the usage of AI.⁵ The Bill addresses the growing concerns with “high-risk artificial intelligence systems.”⁶

This Bill does not come as a surprise, though. Texas has taken many small steps over the past few years to research and monitor the use of AI. In 2023, Governor Greg Abbott established the Artificial Intelligence Advisory Council.⁷ While this council was not in charge of any policymaking, their efforts largely impacted the decision to create the Bill.⁸ The author of the Bill, House Representative Giovanni Capriglione, was also the council's chairman.⁹ In their final report in November 2024, the council made twenty recommendations on policy changes and new legislation that should be passed to regulate AI.¹⁰

Has similar legislation been enacted?

Despite the lack of regulation, Texas is not the first state to join the party. Almost 41 states have tried to enact similar legislation.¹¹ Even with the uptick in states recognizing the importance of AI regulation, only half have successfully passed legislation.¹² Colorado, California, Illinois, and Utah were some of the first.¹³ The common theme among the passed and proposed bills is that AI use must be fair and transparent.¹⁴

Has there been opposition to the Texas bill?

Despite nationwide legislation, the bills do not come unopposed. In Texas, many legislators and citizens are against such stringent regulations on the use of AI. The main concerns arise from the cost of potential compliance, ambiguities within the frameworks, and worries that “heavy-handed” regulation could lead to a lack of innovation and growth.¹⁵ Instead, many AI regulation bill opponents seek “narrowly tailored” or sector-specific policies.¹⁶

What are the main concerns of using AI in the workplace?

Businesses use AI in the workplace in various ways, including hiring and recruitment, performance monitoring, analytics, and the company’s essential decision-making.¹⁷ Despite the wide use of AI to increase productivity and efficiency, there are still privacy and discrimination concerns.¹⁸

1.     Privacy

Employee data collection and surveillance are at the forefront of issues regarding any type of AI usage.¹⁹ AI systems can monitor employee performance and communications and analyze their behavior patterns in the workplace.²⁰ Additionally, businesses can collect sensitive data without proper consent from employees.²¹ Despite the argument that this tool increases productivity, constant monitoring can lead to the feeling that “big brother” is watching, eroding the trust employees have in their employer.²²

Further, AI systems rely on input to function, which can raise concerns about how data is stored, protected, and shared.²³ Without clear communication, employees may be unaware of how their data is used or who can access it.²⁴ Without extensive guidelines and oversight, these systems could expose sensitive information.²⁵

2.     Discrimination

Moreover, the use of AI also raises a host of concerns about workplace discrimination.²⁶ AI systems are “trained” using historical data, which can reflect centuries of biases in hiring and promoting.²⁷ Studies have shown that AI systems put women and minorities at a disadvantage due to biased data training.²⁸ Without a human’s touch, AI-made employment decisions can actually lead to more workplace discrimination.²⁹

What steps would employers need to take to comply with the Bill?

The Bill places strenuous policies on the usage of AI in the workplace and is one of the strictest proposed bills by any state regulating AI.³⁰ Employer compliance with the proposed guidelines would require many steps but could alleviate future trouble if the Bill is enacted.³¹

1.     Human oversight and evaluations

The most prominent theme throughout the Bill is ensuring human oversight and strict assessment protocols to monitor the AI systems used.³² What would this look like for employers who use AI in essential decisions? Under the proposed law, businesses would be required to conduct annual reviews of their AI systems to ensure there are no algorithmic biases leading to discrimination.³³ Additionally, companies must conduct semi-annual system evaluations when significantly modifying their system.³⁴ The Bill drafters deemed evaluations necessary to ensure fairness and accuracy within the systems and how they make their decisions.³⁵

2.     Transparency and disclosures

Another important theme throughout the Bill is employee and candidate transparency.³⁶ The Bill requires businesses to disclose to clients and employers alike their AI usage.³⁷ This disclosure must include the purpose, the nature of its capabilities, and the potential impact of its outputs.³⁸ Businesses must also provide contact information for those who oversee the AI systems, so individuals can seek clarification or question decisions driven by these systems.³⁹ By enacting these guidelines, the Bill aims to help individuals challenge unfair AI systems and increase accountability amongst employers.⁴⁰

Conclusion

While the Texas Legislature has not yet passed the Bill, employers can be proactive by preparing for compliance. Employers can get ahead of the curve by familiarizing employees with their AI systems, enacting regular evaluations, and training those who use the systems for essential decisions.⁴¹ By establishing compliance strategies, businesses will be better equipped to transition if the Bill is enacted.⁴² Regardless of the Bill’s legislative outcome, the Texas Legislature has taken a big step in recognizing the growing importance of AI’s role in the workplace while also understanding that checks must be in place to keep the systems fair and reliable.⁴³

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Sources:

[1] Darrell M. West & John R. Allen, How artificial intelligence is transforming the world (Brookings, 2018).

[2] AI In The Workplace – Important Considerations And Things Employers Need To Do Now, Buchanan (Jan. 30, 2024), https://www.bipc.com/ai-in-the-workplace-important-considerations-and-things-employers-need-to-do-now.

[3] Matthew U. Scherer, Regulating Intelligence Systems: Risks, Challenges, Competencies, and Strategies, 29 Harv. J. Law & Tech. 354, 356 (2016).

[4] Tex. H.B. 1709, 89th Leg., R.S. (2024).

[5] Id. at § 551.101.

[6] Alonzo Martinez, Texas HB 1709: The AI Law Every Employer Needs to Know About, Forbes (Jan. 17, 2025, 8:00 AM), https://www.forbes.com/sites/alonzomartinez/2025/01/17/texas-hb-1709-the-ai-law-every-employer-needs-to-know-about/.

[7] Press Release, Office of the Texas Governor, Governor Abbott Establishes New Artificial Intelligence Advisory Council (Jun. 13, 2023) (on file with author).

[8] Id.

[9] Keaton Peters, More than a third of state agencies are using AI. Texas is beginning to examine its potential impact, Tex. Tribune, Jan. 2, 2024, https://www.texastribune.org/2024/01/02/texas-government-artificial-intelligence/.

[10] House Comm. on Artificial Intelligence & Emerging Tech., A Report To The House of Representative 89th Texas Legislature, 88th Tex. Leg., at 33–34 (2024).

[11] The Evolving Landscape of AI Employment Laws: What Employers Should Know in 2025, Hunton (Feb. 12, 2025), https://www.hunton.com/insights/publications/the-evolving-landscape-of-ai-employment-laws-what-employers-should-know-in-2025?utm_source=chatgpt.com#socialShare.

[12] Id.

[13] Id.

[14] Id.

[15] Oliver Roberts, Overbroad Texas AI Bill Threatens Innovation and Economic Growth, Bloomberg Law (Jan. 6, 2025, 3:30 AM), https://news.bloomberglaw.com/us-law-week/overbroad-texas-ai-bill-threatens-innovation-and-economic-growth.

[16] Id.

[17] Amanda McCloskey, Keepin’ It Real: Considerations for Employers Using Artificial Intelligence, Troutman Pepper Locke (Feb. 28, 2024), https://www.troutman.com/insights/keepin-it-real-considerations-for-employers-using-artificial-intelligence.html.

[18] Margot E. Kaminski, Regulating the Risks of AI, 103 B.U.L. Rev. 1347, 1378 (2023).

[19] Merve Hickok & Nestor Maslej, A Policy Primer and Roadmap on AI Worker Surveillance and Productivity Scoring Tools 673 (Springer Nature Switzerland AG, 2023), https://pmc.ncbi.nlm.nih.gov/articles/PMC10026198/.

[20] Marguerita Lane & Morgan Williams, Defining and classifying AI in the workplace 21 (Org. for Econ. Coop. and Dev., Working Paper No. 290, 2023) [hereinafter Lane].

[21] Id. at 21–22.

[22] Samantha Murphy Kelly, Your company probably knows you’re reading this story at work, CNN (Mar. 4, 2024, 7:51 AM), https://www.cnn.com/2024/03/04/tech/ai-companies-monitor-employees-at-work.

[23] Lane, supra note 20, at 18.

[24] Joseph J. Lazzarotti & Damon W. Silver, Happy Privacy Day: Emerging Issues in Privacy, Cybersecurity, and AI in the Workplace, National L. Rev. (Jan. 29, 2025), https://natlawreview.com/article/happy-privacy-day-emerging-issues-privacy-cybersecurity-and-ai-workplace.

[25] John K. Waters, 1 in 10 Prompts Could Expose Sensitive Data, The Journal (Jan. 22, 2025), https://thejournal.com/Articles/2025/01/22/1-in-10-AI-Prompts-Could-Expose-Sensitive-Data.aspx.

[26] Olga Akselrod & Cody Venzke, How Artificial Intelligence Might Prevent You From Getting Hired, ACLU (Aug. 23, 2023), https://www.aclu.org/news/racial-justice/how-artificial-intelligence-might-prevent-you-from-getting-hired.

[27] Id.

[28] Id.

[29] Id.

[30] James Broughel, Texas’ Left Turn on AI Regulation, Forbes (Jan. 26, 2025, 6:00 AM), https://www.forbes.com/sites/jamesbroughel/2025/01/26/texass-left-turn-on-ai-regulation/.

[31] Martinez, supra note 6.

[32] Shelly Womack, Big Country Politics: Tackling AI Regulation with House Bill 1709, Big Country (Jan. 5, 2025, 3:29 PM), https://www.bigcountryhomepage.com/big-country-politics/big-country-politics-tackling-ai-regulation-with-house-bill-1709/.

[33] Tex. H.B. 1709 § 551.006(a); Martinez, supra note 6.

[34] Tex. H.B. 1709 § 551.006(a).

[35] Martinez, supra note 6.

[36] Womack, supra note 32.

[37] Tex. H.B. 1709 § 551.007.

[38] Id.

[39] Id.

[40] Martinez, supra note 6.

[41] Martinez, supra note 6.

[42] Martinez, supra note 6.

[43] Martinez, supra note 6.