As an update to our prior post Texas has signed into law the Texas Responsible Artificial Intelligence Governance Act (HB 149) (the Act) which introduces regulations concerning the use of artificial intelligence (AI) systems within the state, impacting various sectors, including human resources. The law becomes effective on January 1, 2026.
Background
The Act establishes a comprehensive framework for governing AI systems. The Act defines an “artificial intelligence system” as a machine-based system that generates output based on received input. It seeks to balance technological innovation with crucial protections for individuals, focusing on transparency, privacy, and the prevention of discriminatory practices.
Key Provisions for Employers
While the Act has broad implications, several key provisions are particularly relevant to human resources and employment practices as follows:
- Prohibited Discrimination in AI Use. The legislation states that it will be against the law to develop or deploy an AI system with the intent to unlawfully discriminate against protected classes under state law (such as race, color, sex, religion, disability, etc.). However, disparate impact alone is not sufficient to demonstrate intent to discriminate under law.
- Prohibited AI Uses. The legislation explicitly prohibits the use of AI systems for:
- Manipulating human behavior.
- Engaging in “social scoring” or classifying individuals based on social behavior or personal characteristics with the intent to assign a social score or valuation that could lead to detrimental treatment.
- Uniquely identifying individuals without their informed consent.
- Discriminating against protected classes.
- Biometric Data Regulation. The Act addresses the capture and storage of biometric identifiers (e.g., retina or iris scans, fingerprints, voiceprints, hand, or face geometry) for commercial purposes. Employers utilizing AI systems that process biometric data must ensure explicit consent from individuals, as merely possessing an image containing a biometric identifier does not constitute consent.
- Transparency Requirements. Governmental agencies are mandated to disclose when consumers are interacting with an AI system. While this primarily targets government entities, the emphasis on transparency may set a precedent for private sector best practices, particularly in candidate interactions or employee-facing AI applications.
- Enforcement and Penalties. The Texas Attorney General has exclusive enforcement authority. Violations of the Act can result in substantial civil penalties ranging from $10,000 to $200,000 per violation, underscoring the importance of compliance.
Next Steps for Employers
Employers should take proactive steps to ensure responsible and compliant use of AI technologies in the workplace.
Start by auditing all existing AI systems, particularly those used in human resource functions, to identify any potential compliance risks. This includes examining how biometric data is collected and stored, assessing the transparency of AI decision-making processes, and confirming that no prohibited applications are in use.
Next, review and update company policies related to AI usage, data privacy, and biometric data collection. Any changes should be reflected in the employee handbook and other internal resources to align with new legal obligations and support consistent implementation.
Employers should also develop and implement clear procedures for obtaining informed and explicit consent from individuals before using AI systems that capture or store biometric identifiers for commercial purposes.
