New York City started enforcing Local Law 144 on July 5, 2023. This law regulates automated employment decision tools, which should help anyone applying for jobs or promotions. As such, you should know what this law does and how it could help you.

What are Automated Employment Decision Tools?

Local Law 144 defines an Algorithmic Employment Decision Tool (AEDT) as a computer-based tool that uses advanced technology. Examples of this technology include machine learning, statistics, data analysis, and artificial intelligence. It helps employers and employment agencies make decisions about hiring and related matters. The tool is more than just a support system; it significantly assists in — or even — replaces manual decision-making.

The Law’s Requirements

The law has three primary requirements that employers must follow to comply. Employers must perform an annual bias audit on any AEDT they use, give notice to job applicants and employees concerning their use, and publish the results of the bias audit.

It bans employers and employment agencies from using AEDTs without confirming that the tools underwent bias audits. The employer must have the audit conducted by a third-party company. However, only companies certified by the New York City Department of Consumer and Worker Protection (DCWP) before conducting audits.

The employer must notify employees or job applicants ten days before the AEDT screens them. The employer must also provide information about the tool, including the job qualifications or characteristics it will assess. The notice must explain how an applicant or employee can obtain a reasonable accommodation under another law.

Finally, employers must also publish a summary of the most recent bias audit. This summary includes the AEDT’s distribution date, which indicates when the employer started using the tool. Other details include the source of the data used for the audit and an explanation of how the audit ensures fairness.

The summary should also include how many people the AEDT classified under the unknown category. It should provide the number of applicants or candidates, their selection or scoring rates as applicable, and the impact ratios for all categories. Employers must comply with these requirements to ensure transparency and accountability.

Penalties for Non-compliance

Employers who fail to comply could receive fines of up to $25,000 per violation. In addition, the law may require the employer to take corrective action, such as training their employees or stopping all use of the AEDT. However, the law does not require extra steps for employers based on the bias audit’s results.

The DCWP recently issued an FAQ to clarify Local Law 144’s requirements. For example, it reiterated that employers must comply with all anti-discrimination laws. As such, the bias audits would ensure they take action to ensure compliance when needed.

The Benefits for Employees and Job Applicants

This new law protects job seekers and employees from discrimination by AI hiring tools and ensures transparency in hiring. As such, job seekers can expect a fair chance at employment. However, you should be mindful of factors like background checks that can impact hiring and promotions. To increase your chances of employment, consider running a self-background check to correct any errors in your background information. This step could help present an accurate profile to potential employers.

Background checks don’t have to be complicated. Try running a self background check today and give yourself a head start.

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New York City began enforcing Local Law 144 on July 5, 2023. This law regulates the automated employment decision tools (AEDT) in New York City. It bans New York employers and employment agencies from using AEDTs when making decisions concerning promotion, hiring, or screening for these processes. 

However, employers can use AEDTs if they undergo bias audits and post the required notices. Unfortunately, the regulations and exceptions have proven complicated for many employers. This confusion spurred the New York City Department of Consumer and Worker Protection to release guidance on the law.

Here is a summary of Local Law 144 and some topics covered by the FAQ.

How Far the Law Reaches

According to Local Law 144, it covers AEDTs used “in the city.” Though used throughout the text, its interpretation remained open, so the FAQ clarified “in the city” as requiring one of the following:

• Part-time or full-time, the job’s location is an office in NYC;
• A fully remote job with an associated location in an office in NYC;
• The employment agency using AEDT is in NYC; if located outside of NYC, then one of the above bullets proves true

Bias Audits Explained

According to Local Law 144, employers must conduct bias audits to use AEDTs. They must also publish a summary of the most recent audit, showing when the employer started using it. However, the law provides no specific actions employers must take after receiving the audit’s results.

As such, the FAQs explained compliance requirements for employment agencies and employers. It described the anti-discrimination laws and how to comply with them after receiving the audit results.

Demographic Information

The FAQs also covered what employers can do if demographic information becomes unavailable or lacks significant historical data. In these cases, employers and employment agencies can use test data when conducting bias audits. Otherwise, they may use the historical data of other agencies or employers.

However, the law issued stipulations when relying on this data. The employer or employment agency must supply the independent auditor conducting the bias audit with historical data from their AEDTs. Otherwise, they may use this data if this is the employer’s or agency’s first time using AEDT. In addition, they cannot impute or infer demographic information when unavailable.

Vendors

AEDT vendors cannot perform bias audits on their devices. However, they may hire an independent auditor to review their equipment. This action is optional for the vendors, as they hold no responsibility for guaranteeing bias audited tools. The employer or employment agency maintains responsibility for ensuring AEDTs undergo bias audits.

The FAQs provide more information for employers and employment agencies within Local Law 144’s reach. Those who must comply should work with an experienced background screening company to ensure compliance with the AEDT law. The right provider will keep them up-to-date, comply with all relevant employment laws, and deliver accurate reports.

Keep your business up to date on new laws and regulations with JDP’s free news resources. Contact a sales rep today.

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New York employers should think twice before using automated or artificial intelligence (AI) tools. As of July 5, 2023, New York City’s Department of Consumer and Worker Protection (DCWP) can enforce the new ordinance, Local Law 144. This ordinance limits the use of automation and AI for making employment decisions.

The New Law

Local Law 144 restricts employers and employment agencies from using automated & AI employment decision tools. According to the law, it regulates hiring and promotion choices only. However, it offers exceptions to the rule, such as bias audits. 

Employers may use tools that have undergone the bias audit within one year of their use, make the results viewable to the public, and provide specific notices to employees or job candidates of their use. Employers become liable for civil penalties when they violate any provisions; the first violation starts at $375.

Local Law 144 defines automated and AI employment decision tools as “any computational process[es], 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.” 

How Can Employers Comply When Relying on AI?

Local Law 144 requires employers to ensure their tool has undergone a biased audit. However, an independent auditor must run it within the past year to determine the tool’s potential negative impact. They will review it for bias against sex, race, and ethnicity. 

In addition, employers must publicize the audit’s results and the date it took place. They can accomplish this by posting it on their website. However, employers must ensure the information proves easy to find and visible.

Finally, candidates for hiring or promotions must receive a ten-day notice before employers can use the tool. The notice must inform them of the intention to use an automated tool and explain what data it will use. It must also include details about the tool and the employer’s data retention policy. 

The employer may deliver this notice in the form of a single, obvious statement in various ways. Examples include posting it on the employment page of their website, a career listing, or physical or electronic mail to the candidate. However, candidates may request an alternative selection process or accommodation.

Employers should know about the impacts of the DCWP’s new rules on hiring with automation and AI tools. For example, employers utilizing automation or AI tools must submit appropriate audits, public reports, and notices to remain compliant. As such, these employers must develop a widespread compliance plan as soon as possible. 

Local Law 144 is the first law to regulate automation and AI tools in employment. As such, many expect it to influence the nature and passage of future laws in other municipalities and states. NYC employers should review their hiring policies to comply with the new ordinance. The best way to ensure compliance is by working with a dependable background check provider. The right partner will assist in navigating current and future regulations.

Keep your business up to date on new laws and regulations with JDP’s free news resources. Contact a sales rep today.

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