Many employers and employment agencies have turned to artificial intelligence (“AI”) tools to assist them in making better and faster employment decisions, including in the hiring and promotion processes. The use of AI for these purposes has been scrutinized and will now be regulated in New York City. The New York City Department of Consumer and Worker Protection (“DCWP”) recently issued a Notice of Public Hearing and Opportunity to Comment on Proposed Rules relating to the implementation of New York City’s law regulating the use of automated employment decision tools (“AEDT”) by NYC employers and employment agencies. As detailed further below, the comment period is open until October 24, 2022.
NYC’s Local Law 144, which takes effect on January 1, 2023, prohibits employers and employment agencies from using certain AI tools in the hiring or promotion process unless the tool has been subject to a bias audit within one year prior to its use, the results of the audit are publicly available, and notice requirements to employees or job candidates are satisfied. The DCWP, the New York City agency responsible for administering this law, proposed the new rules to clarify the responsibilities of employers and employment agencies once the statute goes into effect.
What tools are impacted? What are “Automated Employment Decision Tools”?
The law governs “AEDTs,” which are defined 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.” The proposed rules outline which tools fall within the scope of the law by defining “to substantially assist or replace discretionary decision making” as:
- relying solely on the tool’s output (score, tag, classification, ranking, etc.) without considering other factors;
- using the tool’s output as one of a set of criteria where the output is weighted more than any other criterion in the set; or
- using the tool’s output to overrule or modify conclusions derived from other factors.
When does the statute apply? Who are “candidates for employment”?
The new law applies when employers and employment agencies use an AEDT to screen either “candidates for employment” or “employees for promotion” within New York City. The proposed rules define “candidates for employment” to mean persons who have applied for a specific employment position by submitting the necessary information and/or items in the format required by the employer or employment agency.
What is the “bias audit”?
Local Law 144 prohibits the use of an AEDT unless it has been the subject of a bias audit within one year prior to its use. Under the proposed rules, the structure and requirements for the bias audit change based on how the AEDT is used.
- Where an AEDT selects individuals to move forward in the hiring process or classifies individuals into groups, the bias audit must: (i) calculate the selection rate for each category/classification and (ii) calculate the impact ratio for each category/classification. Categories are the component 1 categories (race, ethnicity and gender) as designated on the federal EEO-1 report.
- Where the AEDT only scores individuals rather than selecting them, the proposed rules require the bias audit to: (i) calculate the average score for individuals in each category and (ii) calculate the impact ratio for each category.
An “independent auditor” must perform bias audits. The proposed rules define “independent auditor” as “a person or group that is not involved in using or developing an AEDT that is responsible for conducting a bias audit of such AEDT.”
What happens with the audit results?
The proposed rules clarify Local Law 144’s requirement that the results of a bias audit must be “made publicly available on the website of the employer or employment agency” prior to use by stating that the information must be posted “on the careers or jobs section of their website in a clear and conspicuous manner.” Additionally, the proposed rule would require the information to remain posted for at least six months after the AEDT was last used to make an employment decision.
What about the notice requirements?
Local Law 144 requires that any employer or employment agency that uses an AEDT to screen an employee or a candidate who has applied for a position for an employment decision must notify individuals who reside in New York City that the AEDT will be used in connection with their assessment or evaluation, as well as the job qualifications and characteristics that the AEDT will consider. Notice must be provided at least 10 business days before use of an AEDT and must include instructions for how to request an alternative selection process or accommodation.
The proposed rules provide guidance to employers and employment agencies on how to satisfy the law’s notice requirements.
- For candidates for employment, the rules allow notification to impacted individuals through the following means:
(i) on the careers or jobs section of its website in a clear and conspicuous manner,
(ii) in the job posting, or
(iii) via U.S. mail or e-mail.
- For existing employees, the law’s notice requirements may be satisfied through:
(i) written policies or procedures,
(ii) in the job posting, or
(iii) written notice in person via U.S. mail or e-mail.
How do I comment on the proposed rules?
Anyone can comment on the proposed rules by:
- Submitting Written Comments: Written comments on the proposed rules must be submitted on or before Monday, October 24, 2022 and may be submitted via email at Rulecomments@dcwp.nyc.gov or through the city’s rules website at http://rules.cityofnewyork.us.
- Attending the Public Hearing: Interested parties may attend the public hearing on the proposed rules, which is scheduled to take place on Monday, October 24, 2022 at 11:00 AM. Additional details on how to access the public hearing via phone or videoconference are available here.