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NYC’s Artificial Intelligence Hiring Law Implementation is Right Around the Corner

Late last year, the New York City Council passed Local Law Int. No. 1894-A, which amended the City’s administrative code to give new protections to employees during the hiring and promotion processes. The law protects individuals from unlawful bias by an employer when automated employment decision tools (AEDT) are used.

On September 23, 2022, the NYC Department of Consumer and Worker Protection (DCWP) published proposed rules to implement NYC’s automated employment decision tools law. Public comment to the rules was held on November 4, and the hearing was well attended by over 275 participants, all seeking clarity on various parts of the rules. The DCWP will now consider the feedback that was provided at the hearing and issue their final rule.

The proposed rules clarified the requirements for the use of AEDT within NYC, the bias audit for the tool, the required published results of the bias audit, and the notices to employees and applicants for employment regarding the use of the tool.

Here are some key areas covered by the proposed rules that NYC employers will want to take notice of and prepare for:

Bias Audit Requirement: Bias audits must be conducted by an independent auditor no more than one year before the AEDT’s use. The proposed rules explain that there are two distinct audits that must be run depending on the type of AEDT being used. The rules define an independent auditor as “a person or group that is not involved in using or developing an AEDT that is responsible for conducting a bias audit of such AEDT”. Further guidance was requested during the November 4 hearing.

For employers using an AEDT to select individuals to move forward in the hiring process or classifies individuals into groups, the bias audit must, at minimum, calculate the selection rate and impact ratio for each demographic (race/ethnicity, sex) and each classification.

For employers using an AEDT to score individuals to move forward in the hiring process, the bias audit must, at minimum, calculate the average score for individuals in each category; and calculate the impact ratio for each category.

Published Results and Notices: The rules provide guidance on the requirements for posting the audit results. Before using a specific AEDT tool, employers must publicize on their websites a summary of the results of their most recent bias audit and the date the employer started using the AEDT. The proposed rules give employers an alternative option to this requirement by permitting employers to post an active hyperlink on their careers or job section of their website to another website containing the required summary and distribution date. The summary of results and the distribution date must be posted for at least six months after AEDT’s last use.

Employers must also notify all candidates and employees residing in NYC with at least ten business days advance notice of the use of an AEDT and the job qualifications and characteristics to be assessed. The proposed rules also require that the notice include instructions on how to request an alternative selection process or accommodation, but also indicate that nothing requires an employer to provide an alternative selection process.

In an attempt to limit the notification burden, the rules provide alternate ways to comply with the notification requirement. Employers may provide notice by:

  1. Including notice on the careers section of its website in a clear and conspicuous manner (for candidates) or in a written policy or procedure (for employees);

  2. Listing the notice on a job posting;

  3. Providing the notice via U.S. mail or e-mail.

Employers are also required to retain information about the data collected for the AEDT being used and its data retention policy. This information may be disclosed by either including notice on the careers section of its website, or providing written notice in person, via U.S. mail, or e-mail within 30 days of receipt of a written request for this information. If the notice is not included on the career’s website, employers must post instructions for how to make a written request for this information.

This law will be enforced by the City’s Office of the Corporation Counsel; employers in non-compliance could face a $500 fine for the first violation, and $1,500 for each subsequent violation. The fines are multiplied by the number of AI tools used and the number of days the employer fails to correct the non-compliance.


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