Employer AI Headaches: Job Postings, Client Privilege, and Microchip Bans

What employers should know about key developments this week:

• Artificial Intelligence (AI) Conversations Are Not Privileged: In United States v. Heppner, a federal judge found that conversations with an AI tool are not privileged due to the tool's terms of service and privacy policy—a stark reminder that employers should not discuss active cases or employment matters with public AI tools.
• IT Company Fined for AI-Generated Job Postings: The U.S. Department of Justice imposed a nearly $10,000 fine on an IT company for posting AI-generated job advertisements that unlawfully excluded U.S. citizens—highlighting the need for employers to keep a human in the loop when using AI in hiring.
• Washington Bars Mandatory Employee Microchipping: Starting in mid-June 2026, Washington State will prohibit mandatory employee microchip implants, joining more than a dozen states that have banned the practice.
• Colorado Works to Repeal 2024 AI Law: A working group has proposed repealing and replacing Colorado's comprehensive AI law before its June 30, 2026, effective date, which would remove onerous compliance and reporting obligations on employers, including small businesses.

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