MEMORANDUM **To:** Cinder Peak Foods **From:** Statutory Analysis Counsel **Re:** Mosaic and the Applicant Screening Transparency Act **Date:** [Current Date] --- ## Executive Summary Mosaic is likely a “screening instrument” under the Applicant Screening Transparency Act. The Act defines the term functionally, and Mosaic’s actual operations — not its internal labels — control. Human review and override do not defeat statutory “use,” and the clerical-tool exemption does not apply because Mosaic does more than record, transcribe, or route information: it analyzes applicant characteristics, generates narrative assessments, and recommends “advance” or “do not advance.” The company’s strongest arguments — that Mosaic is merely a “copilot,” that recruiters make final decisions, and that a 2012 statute should not reach generative technology — are understandable but unlikely to prevail under the Act’s text and interpretive rules. The safest course is to pause Mosaic’s evaluative outputs immediately, modify the system so that any resumed use complies with the notice and audit duties, and notify the regulator of the cure within the 30-day window. --- ## I. Mosaic Satisfies the Definition of a “Screening Instrument” The Act defines a screening instrument as: > any computational process that assigns a score, classification, ranking, recommendation, or other output that determines or materially influences whether an applicant advances in an employment process. Mosaic is a computational process. It produces two outputs: a narrative assessment and a recommendation of either “advance” or “do not advance.” The statutory word “recommendation” directly covers the second output. The narrative assessment is also an “other output.” The definition does not require a numeric score or a traditional algorithm; it covers a process that “assigns ... recommendation[s].” Mosaic’s output also materially influences advancement. The facts show: - Mosaic is used in first-round interviews for every applicant. - Recruiters see Mosaic’s transcript, narrative, and recommendation. - Recruiters followed Mosaic’s recommendation in 94% of 3,200 applications. - 870 applicants received “do not advance” and left the process at that stage. - The recruiter training slide says to “start from Mosaic’s recommendation” and override “only when the transcript shows a clear miss.” That is not a de minimis or incidental influence. Mosaic is, as a practical matter, the default evaluator of first-round interviews. **Company argument:** Mosaic merely summarizes or “copilots” the interview; the human recruiter makes the decision. The 94% agreement may reflect that Mosaic agrees with recruiters, not that it causes their decisions. **Regulator response:** The Act does not require “but-for” causation. It requires that the output “materially influences” advancement. A presumptive recommendation, followed 94% of the time, materially influences advancement. Also, the company’s own training materials tell recruiters to start from Mosaic’s recommendation. That is direct evidence of influence, not mere correlation. --- ## II. Human Review and Override Do Not Prevent Statutory “Use” The Act is explicit: > An employer “uses” a screening instrument when it deploys the instrument in whole or substantial part to evaluate applicants, even if a human may review or override the output. Cinder Peak deploys Mosaic for all first-round interviews. Mosaic evaluates applicants before a recruiter sees the file. That is deployment “in substantial part” to evaluate applicants. The fact that recruiters can override is expressly not a defense. The 94% adherence rate and 870 applicants who left after receiving “do not advance” make the human-review argument even weaker. Override authority is not the same as independent decision-making. The training instruction to “override only when the transcript shows a clear miss” treats Mosaic as the baseline decision and human review as the exception. **Company argument:** The human is the final decision-maker; Mosaic is only an aid. **Regulator response:** The statute already answers this: “even if a human may review or override.” Human review does not negate use. The question is whether Mosaic is deployed to evaluate, and it plainly is. --- ## III. The Clerical-Tool Exemption Does Not Apply The Act exempts: > A tool used solely to record, transcribe, format, schedule, or route information ... if it does not evaluate applicant characteristics or recommend an employment outcome. Mosaic is not used “solely” for those clerical functions. It: - analyzes content, speech pace, pauses, and examples of teamwork and conflict; - generates a narrative assessment of communication, adaptability, and customer orientation; - produces an “advance” or “do not advance” recommendation. That is evaluation and recommendation, not merely recording or transcription. The exemption is narrow: it applies only to conduct that satisfies every stated condition. Mosaic fails two conditions: it evaluates applicant characteristics, and it recommends an employment outcome. The company may argue that transcription is one component of Mosaic. But the exemption does not cover a hybrid tool with evaluative components. If Cinder Peak disables Mosaic’s analysis, narrative, and recommendation functions and uses it only to record or transcribe, the exemption could apply to that future configuration. It does not apply to the current one. --- ## IV. The Nonexhaustive Examples and 2012 Legislative Materials Do Not Exclude Mosaic The Act lists: > “aptitude tests, personality inventories, scoring algorithms, and ranked resume filters” as examples. The statute says “including,” which makes the list illustrative, not exhaustive. Mosaic does not need to be identical to a 2012-era resume filter. It is enough that Mosaic falls within the enacted definition: it is a computational process that recommends whether an applicant advances. The 2012 legislative materials did not mention generative narratives, recorded video, or language models. That does not create an implied exclusion. A statute can reach technologies that did not exist when it was enacted if the statutory language is broad enough. The Act’s own interpretive instruction confirms this: > Broad functional language reaches later technologies when the conduct falls within the enacted definition, even if legislators did not foresee the mechanism. “Recommendation” is broad functional language. Mosaic makes a recommendation. Legislative silence about AI does not override the statutory text. **Company argument:** The legislators were thinking only about numeric tests and resume-ranking software; applying the Act to generative AI changes the statute. **Regulator response:** The text controls. The examples are illustrative, and the Act expressly contemplates later technologies through functional terms. Silence is not exclusion. --- ## V. Applying the Act to Mosaic Is Not Retroactive Cinder Peak’s retroactivity argument is unlikely to succeed. A statute is retroactive when it attaches new legal consequences to past events, or applies to conduct completed before its enactment. Here: - The Act has been in effect since 2012. - Mosaic is being used now. - The cure letter concerns current and future use. - Any penalties after the cure period would be for continued use after the cure period, not for pre-enactment conduct. The fact that Mosaic is a new type of technology does not make application retroactive. A statute that says “any computational process” can apply to a new computational process. Cinder Peak had fair notice that broadly worded employment-screening obligations could reach new technologies. **Company argument:** This is an “old statute meets new technology” problem, and Cinder Peak could not have known the Act would cover generative interview tools. **Regulator response:** The Act uses functional language and covers current conduct. No retroactivity is involved. The Act’s Section 7 reinforces that later technologies can be covered. --- ## VI. Cinder Peak Has Violated the Notice and Audit Duties ### Notice Duty The Act requires, before collecting information for a screening instrument, that the employer: 1. notify the applicant that automated evaluation will occur; 2. identify the characteristics evaluated in ordinary language; and 3. state the retention period. Cinder Peak’s applicant page says only: > “Your interview may be recorded and reviewed to assist our recruiting team.” That statement is insufficient. - It does not say that automated evaluation will occur. - It does not say that Mosaic evaluates communication, adaptability, customer orientation, speech pace, pauses, or examples of teamwork and conflict. - It does not state the 18-month retention period. - “Reviewed” could suggest human review only. The notice duty applies before collection. Any resumed use of Mosaic’s evaluative functions must be preceded by a compliant notice. ### Employer-Specific Audit Duty The Act requires an independent impact audit before first use and annually. Cinder Peak has no employer-specific audit. The vendor’s general validation report based on customers in several industries is expressly not enough: > A vendor’s general product test is not an employer-specific audit. Even if the vendor’s report is technically sound, it does not assess how Mosaic affects Cinder Peak’s applicants, roles, or hiring process. Cinder Peak must obtain its own audit before using Mosaic again in an evaluative mode. --- ## VII. The Narrow-Construction Rule Applies to Penalty Amounts, Not Coverage The Act says: > Ambiguity in the civil-penalty amount is construed narrowly. The notice and audit duties are remedial and are construed to give effect to the defined coverage. That is significant. Cinder Peak might argue that any ambiguity in coverage should be resolved in its favor because the Act has civil penalties. But the Act itself answers that argument: the narrow-construction rule applies to the penalty **amount**, not to the definition of “screening instrument.” The notice and audit duties are remedial and should be read to effectuate coverage. Cinder Peak may still reasonably argue at a penalty stage that the per-applicant amount should be narrowly calculated. But it cannot use penalty ambiguity to avoid the underlying statutory duties. --- ## VIII. The Strongest Company Argument and the Strongest Regulator Argument ### Strongest Company Argument Cinder Peak’s strongest argument is that Mosaic is a human-support tool, not a decision system: - Mosaic produces a narrative and a recommendation, but a human recruiter sees the full transcript and has override authority. - The company’s internal materials describe Mosaic as an “interview copilot, not a decision system.” - The 94% agreement rate may show that Mosaic aligns with recruiter judgment, not that it causes decisions. - The 2012 Act was enacted before generative AI, and the legislative materials discuss older tools like aptitude tests and resume-ranking software. If a court focused only on the word “determines” and required proof of actual causation, the company might argue that Mosaic’s recommendation did not “determine” the outcome because human recruiters decide. But this argument is weakened by the “materially influences” language and by the actual evidence of influence. ### Strongest Regulator Argument The regulator’s strongest argument is textual and factual: - Mosaic is a “computational process.” - It generates a “recommendation” — “advance” or “do not advance.” - The Act says human review and override do not defeat use. - Recruiters follow Mosaic 94% of the time; 870 applicants left the process after receiving “do not advance.” - The training slide instructs recruiters to start from Mosaic’s recommendation and override only on a clear miss. - The clerical exemption requires “solely” clerical activity; Mosaic analyzes and evaluates. - The Act’s “including” list is nonexhaustive. - The Act explicitly reaches later technologies. - Application is prospective, not retroactive. The regulator’s argument fits the statutory text more naturally. The company’s argument requires reading the human-override provision out of the Act and treating Mosaic’s labels as more important than its conduct. --- ## IX. Concrete Action Within the 30-Day Cure Period Cinder Peak should not continue using Mosaic in its current form. The safest course is to pause or substantially modify the system during the 30-day cure period. Specifically, Cinder Peak should: 1. **Pause Mosaic’s evaluative outputs immediately.** Disable the narrative assessment and the “advance” / “do not advance” recommendation. If the vendor cannot disable those components while preserving a purely clerical transcript function, pause the entire Mosaic system. 2. **Use Mosaic, if at all, only as a recording/transcription tool.** A transcript-only tool may qualify for the clerical exemption if it does not evaluate applicant characteristics and does not recommend an employment outcome. The current Mosaic configuration does not qualify. 3. **Issue compliant notice before any future collection.** If Cinder Peak later restores Mosaic’s evaluative functions, it must notify applicants before they record answers that automated evaluation will occur, identify the characteristics evaluated in ordinary language, and state the 18-month retention period. 4. **Obtain an independent, employer-specific impact audit.** The vendor’s general validation report does not count. The audit must address Cinder Peak’s use of Mosaic, its applicants, and its employment process. Because the audit may take longer than 30 days, Mosaic should remain paused until the audit is complete. 5. **Do not rely on Mosaic’s existing outputs during the cure period.** If Mosaic already generated recommendations for pending applications, Cinder Peak should not continue acting on those outputs without human review. Consider suspending advancement decisions that were based solely on Mosaic’s “do not advance” recommendation until the legal exposure is assessed. 6. **Notify the regulator in writing.** Within the 30-day period, Cinder Peak should state that it is curing the violation, describe the steps taken, and confirm that Mosaic’s evaluative functions are paused pending compliance. --- ## Conclusion The regulator’s position is stronger. Mosaic is a screening instrument; Cinder Peak uses it; the clerical exemption does not apply; the 2012 date does not make application retroactive; and the notice and audit duties have not been satisfied. Cinder Peak should pause Mosaic’s evaluative use now, modify the system for future compliance, and communicate the cure to the regulator within the 30-day period.