Along with what feels like every other person on the planet, I’ve been experimenting with ChatGPT. For the uninitiated, ChatGPT is an AI chat bot developed by OpenAI.
I’m hardly an expert on the subject, but ChatGPT does not appear to “think” the way humans do. It is incapable of subjective judgment. Essentially, it compares a text input (i.e. your written question) against a massive database of text, then provides a text output which should come next based on a probabilistic model of the relationships between the words. In short, it’s a machine that predicts what words should probably come next after the words that came before.
But from what I understand, it doesn’t know what any of the words actually mean (some people have referred to ChatGPT as a “stochastic parrot” – but I’ll leave that debate to the tech wizards and philosophers).
So, what happens if I – an all-too-human employment lawyer – ask this AI chatbot to do something that my clients ask me to do regularly: draft an employment agreement? Let’s put it to the test and see the results.
My goal with the text input was to mimic how I expect a busy HR manager or business owner (not a lawyer) might use ChatGPT: type a high-level description of my needs, but not a full list of the specific legal terms and protections desired.
Please prepare an employer-friendly employment agreement for a provincially regulated Ontario employee on the following general terms:
- $60,000 per year salary
- 4 weeks vacation
- 40 hours per week, Monday to Friday, normal business hours
- car allowance of $300 per month
- commissions of 4% gross sales
I did set some guardrails that a user might not always think of (i.e. a “provincially-regulated employee”), to see if the bot would use that to generate jurisdiction-specific terms. I was also curious how the bot would interpret and apply my request to make the agreement “employer friendly”.
Within a couple of minutes, ChatGPT responded as follows:
This Employment Agreement (“Agreement”) is made and entered into on [Date], by and between [Employer Name], with a registered address at [Employer Address], Ontario (the “Employer”), and [Employee Name], residing at [Employee Address], Ontario (the “Employee”).
- Position and Duties
The Employee is employed by the Employer as [Position] and will perform the following duties and responsibilities: [Insert detailed job description].
The Employer shall pay the Employee an annual salary of $60,000, payable in equal installments on a bi-weekly basis, subject to applicable payroll deductions.
The Employee shall be entitled to four weeks of paid vacation per year, to be taken at a mutually agreed-upon time.
- Working Hours
The Employee shall work forty (40) hours per week, Monday to Friday, during normal business hours, unless otherwise agreed upon by the parties.
- Car Allowance
The Employer shall provide the Employee with a monthly car allowance of $300, which shall be paid on a monthly basis and shall be subject to applicable payroll deductions.
The Employee shall be entitled to a commission of 4% of gross sales generated by the Employee, payable on a bi-weekly basis and subject to applicable payroll deductions.
This Agreement may be terminated by either party upon giving notice as required by the Employment Standards Act, 2000, or upon mutual agreement between the parties. In the event of termination, the Employee shall be entitled to any accrued but unpaid salary, vacation pay, and commissions up to the date of termination.
- Confidentiality and Non-Solicitation
The Employee shall not, during or after the term of this Agreement, disclose any confidential information or trade secrets of the Employer or solicit any of the Employer’s clients or customers.
- Entire Agreement
This Agreement constitutes the entire agreement between the parties and supersedes all prior negotiations, understandings, and agreements between them, whether written or oral. This Agreement may not be modified or amended except in writing signed by both parties.
- Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
By: __________________________ Authorized Signatory
By: __________________________ Authorized Signatory
My review of ChatGPT’s employment agreement drafting skills
My immediate reaction was that it is truly incredible that a free-to-use chatbot produced that draft in about two minutes in real time.
Then I started looking at the specific terms, and that’s when the wheels fell off. Well, a couple of wheels, anyway.
Most notably, the termination clause is simply unenforceable. There is no chance whatsoever that it will provide the employer with the legal protections that it purports to. As all our clients know, the most important term of an employment agreement is usually the termination clause – they’re very difficult to get right, and getting them wrong is a very expensive problem – and ChatGPT still has some learning to do on that front. There is a term for a situation like this, in which an AI confidently projects an answer which is demonstrably incorrect: a hallucination.
Second, many of the terms are overly basic and superficial without the types of “employer-friendly” qualifications and explanatory provisions that a lawyer would probably include. There is nothing about vacation being taken at times pre-approved by the company, nothing about the employer’s ability to change the duties and responsibilities or hours of work (which leaves the door open for a constructive dismissal claim later if those terms are changed), nothing about how commissions work in a termination scenario, no temporary layoffs clause, etc.
It is impressive that the bot included confidentiality and non-solicitation provisions without being specifically asked to include them, but the provisions it produced are general and vague. It’s highly unlikely that they would provide the employer with any type of substantive and enforceable rights.
All that said, it did quickly produce an employment agreement that included the specific terms I asked for and which identified the applicable legislation – the main deficiencies arise from the absence of rigorous, enforceable terms that lawyers usually include to protect employers.
It’s possible that the AI might have generated a higher quality work product if I had provided more detailed and specific instructions. However, the general utility of an AI tool like this will not be very high if the user needs to spoon-feed the bot the right answers just to get a work product that is usable.
In its current state, ChatGPT is clearly a very powerful tool with equally clear limitations. It produced an employment agreement that included the terms I specifically asked for, but some of its terms were clearly unenforceable. Further, it did not have the strategic judgment and foresight to include more robust terms of employment that I did not explicitly ask for. We are still in the early days of this exciting new technology and its potential long-term utility is obvious. Those lawyers that choose to learn how to train and deploy this technology will ultimately have a revolutionary tool to produce high quality, consistent, and compliant documents for their clients faster than ever before.