What Small Business Owners Need to Know about AI Use
Artificial intelligence (AI) tools are becoming part of daily operations for many small businesses — from marketing and customer service to document drafting project management and financial reporting. Has your business implemented an AI use policy? While these tools can increase efficiency and reduce costs, they also raise significant legal questions about data security, intellectual property ownership, and employee use – so it’s important to protect your business now,
The business law team at MSN Attorneys in Trussville, Alabama regularly works with small business owners who want to embrace innovation responsibly. Here’s what you should consider as your business and employees begin relying on AI tools in the workplace in the future.
1. Review Your Contracts and Agreements
As you integrate AI into your business, it is critical to review your existing contracts and form contracts. Most agreements, even those generated recently, do not currently address AI usage or data and privacy handling. You may need to update:
- Employment agreements. We advise clarifying whether and how employees may use AI tools (such as ChatGPT or image generators) for work-related tasks, and who owns the resulting content (typically, the business).
- Confidentiality and non-disclosure agreements (NDAs). It is vital to ensure that sensitive client or business-related data isn’t entered into external or public AI systems that may store or reuse such sensitive information.
- Vendor and service contracts. It is also important to investigate and ensure that third parties using AI tools on your behalf comply with data privacy, intellectual property, and cybersecurity standards.
Reviewing and updating these agreements now can help prevent future disputes over data security, content ownership, and unauthorized disclosures related to the usage of AI systems.
2. Adopt a Clear AI Use Policy for Employees
A company-wide policy outlining how AI can — and, more importantly, cannot — be used is essential. This type of policy can protect your business from unintentional misuse and set clear expectations for your team. Consider addressing:
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- Which AI tools are approved for workplace use.
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- What use cases or activities are approved for AI use (e.g., drafting or rewriting emails might be approved, while generating a client recommendation may not).
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- What types of proprietary data or client information can and cannot be entered into AI systems.
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- Who owns AI-generated materials created during work hours (typically, the business).
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- How employees should disclose AI assistance in reports, proposals, or communications, both internally and externally.
Documented policies help demonstrate your company’s reasonable protective measures should a matter end up in court or mediation/arbitration. Additionally, a written AI policy would demonstrate your company’s commitment to data privacy and ethical use of technology, which is something clients increasingly expect from businesses of all sizes.
3. Evaluate Vendors and Technology Partners
If your business works with third-party vendors, such as marketing agencies or IT service providers, ensure you understand how their teams and systems utilize AI in connection with your business. Ask questions about how your company’s data is collected, stored, and protected.
Contracts should clearly address:
- Data privacy and security obligations,
- Ownership of deliverables and AI-generated content,
- Liability for any data misuse or breach, and
- Compliance with applicable laws and regulations, including state privacy laws.
We recommend an attorney familiar with both business and technology law to review vendor agreements to help ensure your business is well-protected.
4. Stay Proactive as AI Regulations Evolve
AI is evolving quickly and so are the regulations related to it. State and federal agencies continuously release new guidance about automated decision-making, consumer data, and intellectual property. To ensure your AI-related policies and business contracts remain current, schedule an annual review based on the latest regulations. Working with counsel who understands both the opportunities and risks of AI usage can help your business leverage innovative business tools while staying compliant as the legal landscape changes.
The Bottom Line of AI in the Workplace
AI can be an efficiency-driven game-changing tool for small businesses when used carefully and thoughtfully. By reviewing and updating your contracts, adopting an internal policy, communicating with third-party vendors and agents, and working with trusted legal advisors, you can confidently integrate AI into your business operations while minimizing risk.
Do you need help creating your company’s AI policy or reviewing and updating your company’s contracts? Contact MSN Attorneys in Trussville, Alabama for experienced legal guidance tailored to small businesses.