What Employers Should Know About President Trump’s AI Executive Order | Sheppard Mullin Richter & Hampton LLP

EO’s Purpose and Structure: On December 11, 2025, President Trump signed an Executive Order (EO) titled “Ensuring a National Policy Framework for Artificial Intelligence.” The EO aims to encourage AI innovation by reducing barriers to development and lessening inconsistencies in state regulations. It establishes an AI Litigation Task Force to challenge state laws seen as conflicting with these goals.
State AI Laws: Many employers currently use AI in hiring and related processes. Several states, including California, Colorado, Illinois, Maryland, and Texas, have enacted laws to limit the risk of discriminatory employment decisions involving AI, such as the California Consumer Privacy Act (CCPA) requiring businesses to perform risk assessments and provide notices before using AI in hiring.
Uncertainty in Compliance: The EO creates uncertainty regarding how employers should comply with both federal initiatives and state AI laws. Given its intent to challenge state regulations deemed inconsistent with its goals, employers need to navigate this complex regulatory landscape carefully.
Current Compliance Guidance: The EO does not invalidate existing state and local AI laws, so employers must continue to comply with these until they are struck down by a court or replaced by federal law. Employers should stay informed and consult legal counsel to manage compliance with both existing and evolving regulations.

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