In less than one year, any employer in New York City that uses automated tools to screen job applicants must demonstrate that an annual bias audit has been completed to continue using such tools.

The law, which takes effect on January 1, 2023, will require employers to arrange for an independent auditor to complete a yearly evaluation of automated tools that use machine learning, statistical modeling, data analytics or artificial intelligence to screen job applicants – such as sifting through resumes and other information – to analyze the tool’s potential to discriminate against candidates in protected groups, such as race, age, sex or national origin.

The law will also apply to automated tools used by an employer in decisions related to current employees, such as promotions.

Employers will be required to publish on their website a summary of the most recent audit results and the distribution date of the tool to which the audit applies.

Notice to Job Applicants and Employees

No less than 10 business days before using an automated tool, an employer must inform a job applicant or employee of the following:

• An automated decision tool will be used in connection with the employment decision; and
• The types of qualifications and characteristics that such automated employment tool will use in assessing the applicant or employee.

Once this information is disclosed to a job applicant or employee, an employer must give the applicant or employee an opportunity to request an alternative selection process. While the law requires that an employer provide this accommodation, it does not provide any specifics as to what this alternative selection process entails. Nor does it state whether an employer must accept such a request or under what circumstances an employer is permitted to decline the request.

Furthermore, if not already published on its website, an employer must, within 30 calendar days of a job applicant’s or employee’s written request, provide information about the type of data collected for the automated employment decision tool, the source of such data and the employer’s data retention policy. However, an employer cannot provide such information where such a disclosure would violate federal, state, or local law, or where such disclosure would interfere with a law enforcement investigation.

Penalties for Violation of the Law

Failure to adhere to the requirements of this law may result in a fine of up to $500 for the first violation and up to $1,500 for each subsequent violation.

This law creates far more questions than it answers. We expect the City to provide additional guidance, but not until closer to 2023. In the meantime, employers should evaluate their automated systems and determine whether they may be impacted by the new law.

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