What to Know About NYC’s Newly Enforced Local Law 144

July 27, 2023

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.

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