AI in HR: What You Need to Know About Using AI in Recruiting and Payroll 

AI is transforming how businesses handle HR—allowing employers to quickly screen resumes, predict turnover, calculate pay, and flag anomalies. These innovations can improve efficiency, but they also raise serious questions around fairness, accuracy, and regulation. And in states like New York, those questions are already becoming law. 

Whether you're automating pay runs or using software to rank candidates, you need to understand how AI affects compliance. That's where a partner like TBM—built for complex, high-regulation environments—can give you an edge. 

How AI Improves Payroll Accuracy and Efficiency 

AI-powered payroll tools reduce manual work and improve accuracy at scale. Best of all, small and mid-sized businesses can now access automation that was once only available to large enterprises. AI payroll systems can: 

•  Automate gross-to-net pay calculations 
•  Sync tax rates across federal, state, and local levels 
•  Flag duplicate or missing time entries 
•  Auto-schedule payroll runs and reporting cycles 

These tools help employers process payroll faster, reduce repetitive admin tasks, and reduce basic errors. AI can be a powerful efficiency driver for growing teams or companies operating in multiple locations, especially with the right strategy. 

How AI Impacts Payroll Compliance 

AI in payroll software automates routine tasks, but it doesn’t eliminate your responsibility to follow the law. In fact, it can make compliance more complicated.  

From tax calculations to wage classifications, the burden of compliance remains squarely on the employer. And, if something goes wrong, the business—not the AI—is held liable for those mistakes.

Here’s where AI in payroll often falls short: 

• Misclassifying exempt vs. non-exempt employees 
• Failing to apply state-specific pay frequency laws (e.g., NY manual labor rules) 
• Overlooking nuances in tip credits, bonuses, or retroactive pay 
• Ignoring multi-state wage thresholds or benefits eligibility 

A trusted PEO like TBM reviews both the software logic and the legal context. We help clients use technology responsibly while shielding them from risks. 

How AI Is Used in Hiring 

Like in payroll, AI in hiring helps employers speed up recruiting. Many businesses now use automated tools to filter resumes, score candidates, or recommend interview shortlists. These systems rely on algorithms to make or assist in employment decisions, including:  

• Resume screeners that scan for keywords or job history 
• Tools that assign “fit” or “likelihood to succeed” scores 
• Scheduling bots and automated outreach tools 
• Video assessments that evaluate tone, body language, or speech patterns 

While these tools offer convenience and scale, they can unintentionally embed bias or apply inconsistent criteria. That’s why regulators—starting in New York—are stepping in to ensure fairness, transparency, and accountability. 

What You Should Know About New York’s AI Hiring Law 

New York City’s Local Law 144 regulates how employers use AI in hiring, including:  

• Annual bias audits by independent evaluators
  
• Candidate notifications before using any automated decision tools 
• Public disclosures explaining how the AI works and what it evaluates

• Weekly pay requirements for manual laborers 
• Strict enforcement of pay equity and transparency 
• Harsh penalties for misclassification and late wages 
• Required disclosures around hiring and employment decisions 

If you hire in multiple states, your compliance plan must cover every jurisdiction—especially New York. Working with a New York-based PEO gives you built-in protection. 

AI Is a Tool. TBM Is Your Compliance Partner. 

AI can help your business move more efficiently, but it doesn’t replace the need for judgment and oversight. Businesses need automation that works—but more importantly, they need a compliance strategy built to last. 

That’s what TBM offers: high-tech systems, high-touch support, and regulatory reliability you can trust. Whether you’re hiring hourly workers, managing multi-state teams, or scaling your operations, we make sure your payroll is fast, accurate, and compliant. 

Ready to Review Your Payroll Setup? 

AI isn’t going anywhere—and neither is payroll regulation. If your system uses automation, let’s ensure it’s helping, not hurting. TBM will assess your risk, review your setup, and help you navigate what’s next.

Schedule a compliance review with TBM today.