The city in 2021 passed the law, which amended New York City’s administrative code regarding how employers use “automated employment decision tools.” The measure was a response to how this type of technology can create unconscious bias, according to city officials.
The law went into effect Jan. 1, 2023, though there have been recent updates for employers to note.
New York City: AI in Hiring Enforcement
Earlier this month, New York officials announced that enforcement of the law will begin July 5, 2023. The New York City Department of Consumer and Worker Protection will oversee the enforcement.
Under the law, employers (and employment agencies) using an automated employment decision tool in hiring practices must:
Perform a “bias audit” of the software within a year of its use
Make information of the audit available publicly
Inform job seekers and existing employees of its use
Meanwhile, New York officials also recently published a notice of adoption of final rule. The document outlines several items related to the New York City AI hiring law, helping employers to clarify:
Definitions of terms
Requirements for a bias audit
Requirements for the published results of the bias audit
Requirements for notices that employers and employment agencies must provide to employees and job candidates
Other obligations for the employer or employment agency
Taking a look at each of these items…
Definition of Terms
Importantly, the final rule clarifies what an automated employment decision tool is. It goes by the original definition (quoted here), but the final rule adds some supporting language.
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.
Under the final rule, the phrase “substantially assist or replace discretionary decision making” means:
To rely solely on a simplified output (score, tag, classification, ranking, etc.), with no other factors considered
To use a simplified output as one of a set of criteria where the simplified output is weighted more than any other criterion in the set
To use a simplified output to overrule conclusions derived from other factors, including human decision-making
Other terms, including employment agency, historical data, employment decision, “impact ratio” and more are also included in the final rule, as well as some examples.
Bias Audit Requirements
A bias audit — conducted by an independent auditor “capable of exercising objective and impartial judgment on all issues within the scope of a bias audit” — must calculate the impact ratio of protected categories under Equal Employment Opportunity law.
It’s a complicated section of the final rule and its real-world application. City officials provided an example:
Publishing Audit Results
In terms of publishing audit results, employers must include the “distribution date” of the tool and include a link to a website that summarizes the bias audit.
The NYC artificial intelligence hiring law includes a notice requirement for employees or candidates who have applied for a job. The notice must include information that:
An automated employment decision tool will be used in connection with the assessment or evaluation of such employee or candidate that resides in the city. The notice must be made no less than 10 business days before such use and allow a candidate to request an alternative selection process or accommodation
The job qualifications and characteristics that an automated employment decision tool will be used in the assessment of such candidate or employee. Such notice shall be made no less than 10 business days before such use
If not disclosed on the employer or employment agency’s website, 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 shall be available upon written request by a candidate or employee. Such information shall be provided within 30 days of the written request
Technology in HR
The growth of technology use in the HR realm has been growing in recent years. In response, lawmakers and government officials have reacted.
In October 2021, the Equal Employment Opportunity Commission (EEOC) announced it would launch an initiative to ensure that artificial intelligence and similar tools used in hiring and other employment decisions comply with federal civil rights laws.
“Artificial intelligence and algorithmic decision-making tools have great potential to improve our lives, including in the area of employment,” EEOC Chair Charlotte A. Burrows said in a statement. “At the same time, the EEOC is keenly aware that these tools may mask and perpetuate bias or create new discriminatory barriers to jobs. We must work to ensure that these new technologies do not become a high-tech pathway to discrimination.”
While groups are starting to regulate some forms of technology for HR teams, it is becoming more important to those on the ground.
Plus, potential talent shortages, the Great Resignation, quiet quitting and other factors have prompted the use of more technology.
With New York beginning enforcement of the AI hiring law starting July 5, 2023, employers that use these tools should review their practices to maintain compliance.
Lastly, employers found in violation of the NYC artificial intelligence hiring law will be assessed a civil penalty of $500 for the first violation, and between $500 and $1,500 for each subsequent violation.
This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.
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