Artificial Intelligence in Business: Opportunity, Ethics, and Real-World Risks for Companies in Pennsylvania and New York
Updated: 7 hours ago
Artificial intelligence ethics has become a practical business issue as companies increasingly rely on AI for decisions involving employees, customers, data, contracts, and operations. It is woven into everyday business operations, from document drafting and customer service to employment screening and cybersecurity programs. But with this rapid adoption comes equally rapid risk.
Todd B. Nurick is a Pennsylvania and New York business attorney and Fractional and Outside General Counsel. Through the Law Office of Todd B. Nurick, he advises companies on the legal, contractual, governance, employment, privacy, intellectual-property, and risk-management issues associated with artificial intelligence and other emerging technologies.
Artificial Intelligence Ethics: A Business Imperative
Ethical AI use is not an academic concern. It is a legal, financial, and governance issue.
Across federal guidance and developing AI governance frameworks, several core principles repeatedly appear :(1) Transparency (2) Fairness (3) Human oversight (4) Privacy protection (5) Accountability (6) Explainability (7) Security
These principles are reflected in guidance from the National Institute of Standards and Technology (NIST) and the White House Blueprint for an AI Bill of Rights. Businesses are increasingly expected to integrate these concepts into their operations.
Intellectual Property Risks
Intellectual property exposure remains one of the most misunderstood issues in AI adoption. Federal copyright guidance highlights an important distinction: AI generated content may contain elements from training data, which can include copyrighted or proprietary material.
The U.S. Copyright Office has issued multiple rulings clarifying that:
• Copyright protection requires human authorship
• AI generated work without human creative contribution is not copyrightable
• Businesses cannot assume ownership of AI generated materials
Meaningful human involvement is required to avoid copyright rejection or litigation exposure.
Data Privacy and Security
AI systems depend heavily on data. That dependency creates risk.
Your information security material echoes federal and state regulators: companies must minimize the amount of personal, confidential, or regulated data uploaded into AI systems. Businesses must understand whether third parties store or reuse data, whether AI providers retain training rights, and whether employees are using unauthorized tools.
Pennsylvania and New York both enforce breach notification laws. The New York SHIELD Act imposes heightened security requirements, and the Pennsylvania Office of Attorney General has demonstrated increasing enforcement attention to data security practices.
Cyber insurers now ask whether businesses use AI, and in some cases, require disclosure of AI related activities in underwriting questionnaires.
AI in Hiring: Legal and Compliance Exposure
Employment regulators have made clear that existing anti-discrimination laws apply when employers use AI and automated tools in hiring and employment decisions: AI tools that evaluate candidates or employees must comply with discrimination laws.
The Equal Employment Opportunity Commission (EEOC) has warned that employers may remain responsible when automated selection tools result in unlawful discrimination, including when the technology is supplied by a third-party vendor. Several jurisdictions, including New York City, require independent bias audits before using automated employment decision tools.
Companies must ensure they understand how AI screening tools work and whether they comply with federal, PA, and NY employment laws.
AI and Contract Risk
Commercial agreements increasingly address AI use expressly through representations, covenants, disclosure obligations, and risk-allocation provisions: contracts now include AI specific representations. Businesses may be required to:
(1) Disclose how AI tools are used
(2) Warrant that AI does not infringe IP or privacy rights
(3) Provide notice if AI creates an operational incident
(4) Limit use of confidential data in AI training
(5) Meet specific cybersecurity standards when using AI tools
Banks, investors, acquirers, and major vendors increasingly require these covenants.
Antitrust Exposure and Algorithmic Decision Making
Federal antitrust authorities have also focused on the use of algorithms and AI in pricing and competitive decision-making. companies cannot rely on AI or algorithms to justify anticompetitive conduct.
Where competing businesses use shared pricing systems, exchange competitively sensitive information, or participate in arrangements that facilitate coordinated pricing, algorithmic tools can create antitrust risk rather than insulate the participants from it.
Businesses must confirm that their AI systems do not inadvertently mimic competitors in ways that could trigger antitrust scrutiny.
Corporate Governance Expectations
Boards of directors and executive leadership have a duty to oversee risk. AI adoption is now considered a governance issue because it intersects with cybersecurity, employment law, privacy, intellectual property, and contract compliance.
A responsible governance framework should include:
(1) A review of AI use cases(2) Policies governing permitted and prohibited AI use(3) Employee training(4) Regular risk assessments(5) Vendor diligence for third party AI systems(6) Documentation of board oversight(7) A plan for responding to incidents involving AI tools
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Why Businesses Need an AI Use Policy
A well-designed workplace AI policy should translate these governance principles into operational rules employees can actually follow.
A strong policy clearly defines:
(1) Allowed and prohibited uses(2) Required human review(3) Confidentiality rules(4) Privacy and data minimization standards(5) Vendor approval requirements(6) Employee training(7) Incident reporting(8) Record keeping
Conclusion
AI offers tremendous benefits, but businesses cannot adopt it blindly. Companies in Pennsylvania and New York must evaluate how AI affects governance, employment, contracts, intellectual property, cybersecurity, and privacy. With thoughtful planning and ongoing legal guidance, AI can strengthen operations without compromising ethics or compliance.
Todd Nurick and the Law Office of Todd B. Nurick assist Pennsylvania and New York businesses in building responsible, compliant, and sustainable AI frameworks that reduce risk and support long term growth.
This article is for general informational purposes only and does not constitute legal advice. Legal issues involving artificial intelligence, employment, privacy, intellectual property, contracts, cybersecurity, antitrust, and corporate governance depend upon the particular facts, jurisdiction, and applicable law. Reading this article does not create an attorney-client relationship.
About Todd B. Nurick
Todd B. Nurick is a business attorney admitted in Pennsylvania since 1996 and New York since 2010, with approximately 30 years of experience advising businesses on contracts, transactions, corporate governance, investigations, compliance, employment-related business issues, risk management, and disputes. Through the Law Office of Todd B. Nurick, he also serves businesses as Fractional General Counsel/Outside General Counsel, providing experienced legal oversight without requiring a full-time in-house legal department.
Sources
• Federal Trade Commission, “Aiming for Truth, Fairness, and Equity in Your Company’s Use of AI”
• EEOC, “Technical Assistance on AI and Employment Selection Procedures”
• DOJ and FTC Joint Public Remarks on Algorithmic Antitrust Enforcement
This article is for general informational purposes only and does not constitute legal advice. Legal issues involving artificial intelligence, employment, privacy, intellectual property, contracts, cybersecurity, antitrust, and corporate governance depend upon the particular facts, jurisdiction, and applicable law. Reading this article does not create an attorney-client relationship.
This article is for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Businesses should obtain legal advice concerning their particular circumstances.
