The New York State Senate is considering a bill that would restrict employers and employment agencies (collectively referred to as “employers”) from electronically monitoring New York employees or using automated employment decision tools (AEDTs) to evaluate New York job candidates or employees. The key features of the bill, introduced August 4, 2023, are:

• To prohibit the use of electronic monitoring tools, including tracking applications and devices, by employers except for limited purposes and only if it is the least invasive means to accomplish the purpose. The bill seeks to limit employers’ data retention and sharing, and would require employers to disclose the use of electronic monitoring to New York employees in a clear and conspicuous manner.
• To regulate employers’ use of AEDTs by requiring such tools to be subject to a bias audit and requiring employers to provide advance notice of the use of an AEDT to New York employees and job candidates. The bill also proposes that employers be required to publish information about AEDTs on their websites and to have a human person corroborate the AEDT output before relying on it to make an employment decision.

Take Preemptive Action

Even though this bill has not yet been approved by the New York State Legislature or signed into law, employers, employees and job candidates in New York State should take this as a reminder to assess their current practices as the provisions in this bill echo recent statements and enforcement actions by both the Federal Trade Commission (FTC) and the New York Attorney General (NYAG) regarding transparency, data minimization and document retention limitation. In recent enforcement actions, the FTC has discussed the expectation for businesses to provide sufficient disclosure of personal information that is collected, the purposes for which the information is used, and whether the information will be shared with third parties. These issues have also been highlighted in recent guidance from the NYAG regarding information security practices to protect consumers’ personal information. In addition, employers in New York City should make sure that they comply with Local Law 144 regarding AEDTs, as this law has already gone into effect (see our previous alerts here and here).

Key Provisions on Electronic Monitoring

In the proposed bill, “electronic monitoring tool” is defined as “any system that facilitates the collection of data concerning worker activities or communications by any means other than direct observation….” If enacted, the bill would make it unlawful for employers to surveil employees using an electronic monitoring tool unless:

1. The tool is primarily intended to accomplish a permitted purpose identified in the bill.
2. The tool is “strictly necessary to accomplish the allowable purpose and is the least invasive means” for employees.
3. The use of the tool is limited to the smallest number of employees and least amount of data possible to accomplish the permitted purpose.

The bill provides that the restrictions on electronic monitoring tools would apply to “employees,” which are defined as (i) any person residing in New York who is employed by a business operating in New York; and (ii) any independent contractor residing in New York who provides services to or through a business operating in New York.

Restrictions on the Use and Sharing of Employee Data

The bill proposes restrictions on the use, sale, transfer and retention of “employee data” collected by electronic monitoring tools. The bill also proposes restrictions on the use of tracking applications, employees’ personal devices and employees’ bodies and personal effects to collect “employee data.” It seeks to prohibit employers from relying solely on data collected from electronic monitoring tools when making employment decisions.

The bill defines “employee data” very broadly and goes beyond the typical contents of employee personnel records. Employee data would include, but would not be limited to, work process information (e.g., productivity and efficiency data); “device usage and data, including calls placed or geolocation information;” audio and video data; information collected from sensors, including “movement tracking, thermal sensors, voiceprints, or faction, emotion, and gait recognition;” and inputs of or outputs generated by AEDTs that are linked to employees.

Transparency

In addition to restricting the use of electronic monitoring, the bill seeks to require employers to provide advance notice to employees who are subject to the monitoring. The bill proposes that employers provide a “clear and conspicuous” notice that informs the employee that they will be subject to electronic monitoring. A notice that merely states that the employer “may” or “reserves the right” to electronically monitor employees would not be sufficient. Additionally, unlike Section 52-c of the New York Civil Rights Law, which requires employers to provide prior notice of electronic monitoring to employees but does not require specific content in the notice, the bill details a list of specific information that must be included in the notice, such as the purpose of the monitoring, the data to be collected, the period and frequency of the monitoring and how the data will be used and stored.

Key Provisions on Automated Employment Decision Tools

The bill further proposes restrictions on employers’ use of AEDTs and requirements to disclose the use of AEDTs to job applicants and employees. These proposed restrictions and obligations largely mirror New York City’s Local Law 144 on AEDTs.

In particular, the bill introduced in the New York State Legislature would prohibit an employer from using an AEDT unless, prior to its use, the employer:

1. has had a bias audit of the AEDT conducted within the prior year
2. has the results of the most recent bias audit published on its website
3. provides the employee or job candidate with a notice, at least 10 business days prior to using the AEDT, that informs them of the use of an AEDT in the evaluation process and the job qualifications and characteristics used by the AEDT
4. allows the employee or job candidate to request an accommodation or alternative process that does not involve an AEDT.

Further, the bill provides that employers could not solely rely on the output from the AEDT and must conduct a separate evaluation of the employee or job candidate before making an employment decision and corroborate the AEDT output. This obligation is characterized as requiring “meaningful human oversight” and would be satisfied only if the employer designates an internal reviewer who has the education, training, authority, time, and resources to corroborate the AEDT output.

If the AEDT output cannot be corroborated, then the employer cannot use such output in making an employment decision. If the AEDT output is corroborated, prior to implementing the decision, the employer must disclose certain additional information about the AEDT and its role in the decision-making process to the employee or job candidate.

Next Steps

Employers should take the introduction of this bill as a timely reminder to assess their data collection and retention practices. In reviewing their practices, employer should consider the following:

1. Data Minimization: Does the business collected information that is not strictly necessary for the intended use or not disclosed to employees?
2. Purpose Specification: Is information collected about employees being used for its intended purpose? Is the collected information being used for additional purposes beyond the original purpose?
3. Retention Limitation: Is information retained for longer than necessary to accomplish the purpose for which it was collected?
4. Transparency: Does the business maintain and distribute a notice of electronic monitoring that meets with the requirements of Section 52-c of New York’s Civil Rights Law and the FTC’s transparency standard?
5. AEDT: If applicable, does the business’s use of AEDTs comply with the provisions of New York City’s Local Law 144?

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