August 07, 2023
Initially, New York City intended to enforce a law regulating automated employment decision tools (AEDT) starting on January 1, 2023. However, it experienced a delay first to April 15, 2023, to July 5, 2023. As of July 5, New York City has begun enforcing the law, Local Law 144.
However, many employers have encountered similar obstacles due to confusion about the law. As such, the New York City Department of Consumer and Worker Protection (DCWP) provided an FAQ concerning the new law. This FAQ offers guidance to help employers comply with the new regulations.
How It Works
Local Law 144 in New York prohibits employers and employment agencies from utilizing AEDTs in promotion, hiring, or screening decisions. However, it makes exceptions for tools that underwent bias audits. Employers may use these AEDTs after posting the required notices.
According to Local Law 144, it applies “in the city,” which some interpreted as New York City. This unclear phrasing led to the DCWP clarifying its meaning in the FAQ. The Department explained that it encompasses jobs with offices in NYC, either part-time or full-time.
The FAQ also mentioned fully remote jobs. It explained how these positions fell under Local Law 144’s jurisdiction if it had an office within NYC as its associated location. Furthermore, the DCWP clarified how the law applied to NYC-based employment agencies that used AEDTs. However, employment agencies outside NYC could fall under the law’s purview if they meet the criteria above.
These provisions would establish clear guidelines for applying the law based on job locations and employment agencies’ presence within New York City.
Bias Audits
The law requires employers to conduct bias audits on the AEDTs they want to use. In addition, they must publish the most recent bias audit results. This notice must include the date the company started using the tool.
However, Local Law 144 does not require employers to take specific actions based on the audit’s results. The FAQs emphasize that employers must adhere to all anti-discrimination laws. Furthermore, they recommend reviewing the results of the AEDT. This review should allow employers to assess whether they need further action to comply with the anti-discrimination laws.
Employers may use automated employment decision tools audited by an independent auditor on behalf of the vendor. However, the employer or employment agency maintains responsibility for ensuring the AEDTs underwent a bias audit before use. The vendor is not responsible for the bias audit for any AEDT the employer plans to utilize.
Data for Demographic Information
The guidance clarifies what employers or employment agencies can do in scenarios lacking demographic information or significant historical data. In such cases, they may use test data for bias audits instead of unavailable data. They may also use historical data from other employment agencies when faced with inadequate data.
However, the law requires the employer to meet one of two requirements to use another’s historical data. Either the employer provides historical data from using the AEDT to the auditor, or this is their first time using the tool. It is crucial to note that employers and employment agencies cannot impute or infer demographic information when it is unavailable.
Employers must understand the requirements to comply with employment laws like NYC’s Local Law 144. Working with a trustworthy background check company can help. The right partner will use their experience with background screening regulations to guide employers through bias audits and ensure transparency. In addition, the provider can streamline an employer’s hiring process, reduce compliance risks, and create a fair environment for all job seekers.