New York City Enhances Regulation of Automated Employment Decision Tools

A first-of-its-kind New York City law, due to take effect in January 2023, will require employers in New York City who use automated tools for making employment-related decisions to conduct yearly bias audits for the tool and make the results of the most recent bias audit publicly available on their website. They also will be required to provide job applicants prior notice regarding the use of the automated tool, information about the job qualifications and characteristics that the automated tool assesses, the types of data collected and the sources from which it is collected, and the employer’s retention policy.

The law broadly defines “automated employment decision tool” to include “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”. The law does not ban the use of automated tools that are biased, as long as the employer conducts periodic audits and publishes the audit results.

The law’s requirement for prior notice to applicants is meant to allow applicants to request an alternative selection process. However, the law does not state whether the employer must accept such requests, or under what circumstances, if at all, the employer may decline them. Violations of the law can attract civil penalties of up to $1,500 per violation.