U.S. states are increasingly targeting the use of artificial intelligence in wage-setting, as concerns grow over discrimination, privacy, and unfair pay practices. Lawmakers in California, Georgia, Illinois, Maryland, and New York are pushing new or renewed bills in 2026 to regulate how employers use AI-powered compensation systems.
The main concern is that algorithmic wage-setting can rely on historical pay data or personal information unrelated to job performance, potentially reinforcing gender and racial pay gaps. Advocates warn that AI tools may calculate so-called “desperation wages” by analyzing workers’ locations, behavior patterns, or personal circumstances to determine the lowest pay they might accept.
AI-driven pay models are already common in the gig economy, especially among ride-hailing and food delivery platforms. Now, similar technology is expanding into sectors such as healthcare, manufacturing, customer service, and logistics. Legal experts say this trend raises risks under equal pay laws, anti-discrimination rules, wage-and-hour regulations, and antitrust law, particularly if competing companies rely on the same algorithms.
Some state proposals would restrict the use of non-work-related personal data, require human oversight of AI decisions, or mandate worker notification when AI is used in compensation decisions. Although federal preemption remains a possibility, advocates argue that early regulation is essential to ensure AI in the workplace promotes efficiency without undermining fair wages and worker rights.