New York City employers who use automated employment decision tools (“AEDTs”) now have until April 15, 2023, to prepare for compliance with New York City Local Law 144 which regulates usage of such tools. The law was to go into effect on January 1, 2023.

In the below post, we provide a brief overview of the law and its current rulemaking process.

Local Law 144 applies to employers and employment agencies in New York City who use AEDTs to screen applicants for employment or employees for promotional opportunities within the city. An AEDT is defined to mean “any computational process, 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.”

The law makes it unlawful for an employer or an employment agency to use an AEDT to screen a candidate for employment or employee for promotion unless:

• The AEDT has been the subject of a bias audit conducted no more than one year prior to the use of such tool; and
• The employer or employment agency publishes on its website a summary of the results of the most recent bias audit as well as the distribution date of the AEDT to which such audit applies.

A bias audit is an impartial evaluation by an independent auditor that includes testing of the AEDT to assess its disparate impact on persons of any component 1 category required to be reported by employers in their EEO-1 reports as mandated by Title VII of the Civil Rights Act of 1964, as amended (e.g., composition of an employer’s workforce by race/ethnicity, sex and job categories).

In addition, covered employers must notify employees/candidates who reside in New York City of certain information at least 10 business days prior to using the AEDT. This includes the fact that an AEDT will be used and the job qualifications and characteristics that the AEDT will use in the assessment. Unless otherwise disclosed on the employer or agency’s website, candidates or employees can request additional information regarding the entity’s data handling practices. Covered employers must also allow candidates to request an alternative selection process or accommodation.

Violations of the law are subject to civil penalties up to $500 for a first violation and each additional violation occurring on the same day as the first violation, and between $500 and $1,500 for each subsequent violation. Each day of using the AEDT is treated as a separate violation. Failure to provide the required notices to a candidate or employee also are separate violations.

The law was initially scheduled to go into effect on January 1, 2023, and has been the subject of ongoing interpretive rulemaking by New York City’s Department of Consumer and Worker Protection (“DWCP”). The DWCP recently announced that enforcement of Local Law 144 would be postponed to allow for a second public hearing after the DWCP released its proposed rules in September and held a public hearing on November 4, 2022. In response to publication of its proposed rules, the DWCP received a “high volume of public comments” pertaining to several key issues including what constitutes an AEDT, ambiguities related to bias audits, and the scope of accommodations contemplated by the law.

Extension of the enforcement date allows the DWCP to clarify the rules being drafted to provide guidance on Local Law 144’s requirements. The date for the second public hearing has not yet been posted.

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