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:

  1. relying solely on the tool’s output (score, tag, classification, ranking, etc.) without considering other factors;
  2. 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
  3. 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:

  1. 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
  2. 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
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Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising…

Lindsay Burke co-chairs the firm’s employment practice group and regularly advises U.S., international, and multinational employers on employee management issues and international HR compliance. Her practice includes advice pertaining to harassment, discrimination, leave, whistleblower, wage and hour, trade secret, and reduction-in-force issues arising under federal and state laws, and she frequently partners with white collar colleagues to conduct internal investigations of executive misconduct and workplace culture assessments in the wake of the #MeToo movement. Recently, Lindsay has provided critical advice and guidance to employers grappling with COVID-19-related employment issues.

Lindsay guides employers through the process of hiring and terminating employees and managing their performance, including the drafting and review of employment agreements, restrictive covenant agreements, separation agreements, performance plans, and key employee policies and handbooks. She provides practical advice against the backdrop of the web of state and federal employment laws, such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, the Fair Labor Standards Act, and the False Claims Act, with the objective of minimizing the risk of employee litigation. When litigation looms, Lindsay relies on her experience as an employment litigator to offer employers strategic advice and assistance in responding to demand letters and agency charges.

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Teresa Lewi represents and counsels employers on a wide range of federal, state, and local employment laws. She focuses her practice on trade secrets, non-competition, executive compensation, separation, employee mobility, discrimination, and wage-and-hour issues.
Teresa has successfully tried cases in federal and state…

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Carolyn Rashby provides business-focused advice and counsel to companies navigating the constantly evolving and overlapping maze of federal, state, and local employment requirements. She conducts workplace investigations and cultural assessments, leads audits regarding employee classification, wage and hour, and I-9 compliance, advises on…

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