Silver Lining in New York City? New Requirements For Using A.I. in Employment Decisions

Sheppard Mullin Richter & Hampton LLP

Sheppard Mullin Richter & Hampton LLP

Artificial Intelligence is here to stay and New York City has enacted legal guidelines for employers who use it. NYC’s Automated Employment Decision Tools (AEDT) law will, effective January 1, 2023, set new standards for employers using AI tools in making employment decisions.

While it is likely the AEDT will lead to an uptick in litigation, it provides some much needed clarity for AI developers and auditors. It also provide guidance to employers want to use AI to help eliminate workplace bias. Under the AEDT, NYC employers who use AI must implement the following processes or face civil penalties:

  1. Provide notice to applicants and employees of: (a) the use of A.I. in the assessment for hire or promotion; (b) the job qualifications and characteristics assessed by the A.I. tool; and (c) the data that will be collected.
  2. The A.I. used to make employment decisions must: (a) clear a “bias audit;” and (b) a summary of the bias audit results must be publicly available. The bias audit must be conducted by a third-party auditor and designed to ensure that A.I. used for employment decision-making does not make biased decisions that violate antidiscrimination laws.

A silver lining? The AEDT may provide -much needed- guidance for AI developers, auditors, and employers by setting standards for AI used to make employment decisions. Also, it is anticipated that the AEDT will provide compliant employers ammunition to defend against legal challenges to their use of AI and related discrimination claims.

Putting it Into Practice: NYC Employers have until January 1, 2023 to implement audited AI, and prepare or revise existing applicant and employee data collection and privacy notices. Employers who use AI, or intend to, will want to take steps now to prepare for compliance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Sheppard Mullin Richter & Hampton LLP

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