New York City’s Law Imposing Restrictions on the Use of Artificial Intelligence – What Employers Need to Know
Beginning January 1, 2023, New York City employers and employment agencies utilizing artificial intelligence (AI), and automated employment decision tools for hiring purposes or in discretionary employment decisions will be required to comply with new obligations. New York City Council passed the bill in November 2021, and the bill became law on December 10, 2021, Local Law Int. No. 144.
The new law defines an automated employment decision tool as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for making employment decisions that impact natural persons.” This definition likely encompasses AI tools that assess employees with job match scores, degree or GPA requirements, and video interview software among other tools.
The law requires any NYC employer or hiring agency using automated employment decision tools to conduct a yearly bias audit of such tools and ensure that a summary of the results is publicly available on the employer or hiring agency’s website. Companies or employment agencies that plan to utilize these tools in hiring starting in the New Year should have the tools submitted for an audit for bias and the results available to the public in 2022.
There are notification requirements for all employment candidates residing in NYC concerning the use of automated employment decision tools in the assessment of credentials for candidacy. Notice must be provided no less than 10 business days before use so that it allows candidates to request an alternative process or accommodation. Furthermore, upon written request from a job candidate, information about the type of data collected for the automated employment decision tool, the source of such data, and the employer or employment agency’s data retention policy must be provided within 30 days.
The Council has not released any additional guidance in relation to compliance with the new law. It’s unclear what qualifies as a bias audit, other than the fact that the audit should include an evaluation by an impartial auditor of the automated tool’s disparate impact on persons in protected categories. With many employers utilizing AI decision tools provided by third-party vendors, due diligence will also be required with respect to the vendor’s compliance with the law.
While NYC’s new law does not expressly permit individual claims to be made by employees or candidates where violations occur, organizations found to be in violation are subject to a civil penalty of $500 for the first violation and any additional violations occurring the same day. Each subsequent violation incurs a fine of anywhere from $500 to $1,500. The law also charges separate violations for failing to comply with notice requirements, and for each subsequent day the automated employment decision tool is used without proper notice being given. NYC’s Office of the Corporation Counsel will be responsible for enforcing the law. Failure to correct these issues in a timely manner can lead to an expensive headache for employers.
New York City’s law is the first of its kind in the United States regarding AI hiring bias, but surely won’t be the last. AI regulation has quickly become a concern, with many states and cities considering how to ensure that these types of tools do not aid in bias or discrimination in employment decisions. In addition, the EEOC, in October 2021, addressed the subject of AI tools in employment decisions with respect to compliance with federal anti-discrimination laws.
New York City employers are encouraged to consult with experienced attorneys regarding compliance with the law. Companies may want to seek legal advice with respect to strategies and implementation of practices to protect against potential claims.
The employment law attorneys in our Labor and Employment Practice Group are always available for consultation regarding compliance with this new law. Bleakley Platt’s employment discrimination attorneys are also available for counseling in avoiding discrimination-related litigation. Contact us today at (914) 287-6161 or click here to learn more about how our expertise can help your organization stay compliant.