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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

July 25, 2023

Understanding NYC's AI Bias Law: Impact on Employment Decisions

On July 5, 2023, Local Law 144 of 2021, also known as the AI Bias Law, came into effect in New York City, bringing significant changes to the landscape of employment decisions in the city. The law aims to regulate the use of artificial intelligence (AI) in hiring and promotional practices, specifically targeting the use of automated employment decision tools (AEDTs) by employers within the city. While there are limited exceptions, the law generally prohibits the use of AEDTs in making hiring or promotional decisions.

Understanding AEDTs and Their Scope

The law’s definition of AEDTs is broad, encompassing any computational process derived from AI, machine learning, statistical modeling, or data analytics that simplifies output to assist employers in otherwise discretionary hiring or employment decisions. This broad definition means that even less-sophisticated computer-based tools that are not traditionally considered AI, such as auto-sorters or even filters, may fall under the scope of this law.

Determining Applicability: Questions to Consider

To determine if your business falls under the purview of the AI Bias Law, it is essential to evaluate your current hiring and promotional processes. Consider the following questions:

  1. Does my business use any automated processes in its hiring or promotional decisions?
  2. Do those automated processes make any hiring or promotional decisions?
  3. If so, were any of those automated hiring or promotional decisions affecting an employee who will work in New York City or remotely for a NYC-based business?

Complying With the AI Bias Law

If your business meets the criteria outlined above, you must follow each of these steps to comply with the AI Bias Law: 

  1. Conduct an annual independent bias audit.
  2. Publish the audit results on your website.
  3. Notify applicants and employees of the tool’s use.
  4. Provide notice that the individuals subject to the tool may request a reasonable accommodation.

Conducting the Bias Audit: Ensuring Fairness

To ensure compliance with the AI Bias Law, you must conduct an independent bias audit of your automated processes before they are implemented and annually thereafter. The bias audit involves manually inspecting your processes to identify and mitigate any implicit racial, ethnic, or sexual biases. Your audit should utilize data used only to assess candidates for employment or employees for promotion. For employers using an AEDT for the first time, you have the option to use historical data from multiple employers using the same AEDT. It is also essential for you to publish a summary of the most recent bias audit results and indicate when you began using the AEDT.

Providing Notice and Avoiding Penalties

In addition to conducting an annual independent bias audit, you must provide job candidates and employees with at least 10 business days’ notice before implementing the use an AEDT. The notice can be provided through a job posting, mail, or email and posting it on the employment section of your business’s website. If you use any type of automated process related to hiring or promotional decisions, your job descriptions and website must clearly mention the use of AEDTs to avoid potential noncompliance penalties.

Conclusion: Ensuring Compliance With the AI Bias Law

New York City’s AI Bias Law is groundbreaking and aims to address the evolving use of AI technology in employment practices while safeguarding against discriminatory decision-making. The NYC Department of Consumer and Worker Protection (DCWP) is responsible for enforcing this law, and noncompliance may lead to civil penalties and lawsuits from both the DCWP and aggrieved individuals.

We encourage NYC-based employers to thoroughly review their employment-decision tools to ensure compliance with this law. If your business uses AEDTs, Barclay Damon’s Labor & Employment Practice Area attorneys can assist you in evaluating whether your processes fall under the law’s purview and help you build the proper notice and audit framework to ensure compliance.

If you have questions regarding the content of this alert, please contact Lee Jacobs, partner, at ljacobs@barclaydamon.com, or another member of the firm’s Labor & Employment Practice Area.  
 

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