Follow us on LinkedIn to see future News.
Michael J. Fortunato Patricia Tsipras
June 29, 2023
On April 6, 2023, New York City adopted Local Law 144 of 2021 (“NYC 144”), the first law in the nation to regulate the use of Artificial Intelligence (AI)-driven tools in hiring and promotion decisions. It becomes effective on July 5, 2023.
NYC 144 will apply to all employers and employment agencies (referred to herein solely as “employers”), no matter where they are headquartered, if they hire or promote employees who reside in New York City.
NYC 144 requires all New York City employers – by July 5, 2023 – to determine whether they use Automated Employment Decision Tools (AEDTs) to make employment decisions.
Automated Employment Decision Tools (AEDTs) 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.” Employers use AEDTs for a variety of tasks in the hiring and promoting process, including selecting candidates for interview and scoring candidates for hiring or promotion. AEDTs covered under NYC 144 are limited to tools that pertain only to candidates who have applied for a specific job; the law does not apply to AEDTs that are used to identify potential candidates who have not yet applied for a specific position.
If employers use AEDTs, they must:
An independent bias audit consists of an evaluation by an independent auditor to assess the tool’s potential disparate impact on sex, race, and ethnicity.
Penalties for violating the new law are significant and include a civil penalty of $375 for the first violation and a civil penalty of at least $500, up to $1,500, for each subsequent violation or uncorrected prior violation. Each failure to meet the requirement of applicant notices constitutes a separate violation. Failure to meet the bias audit requirement also results in separate, daily penalties.
This article merely provides a summary of the new law. The law is as complex and detailed as the AI technology that it seeks to regulate. If you are using AEDTs, seek legal counsel. We can help.
*Special thanks to Ava Petrellese, our Paralegal, and to Brooke Palma, our Office Administrator, for their contributions to this article.
This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice. Always consult an attorney with specific legal issues.
