NYC Enacts Restrictions on Employer Use of Automated Employment Decision Tools
Effective January 1, 2023, employers in New York City who use machine learning, data analytics, and other artificial intelligence tools to make employment decisions will be subject to new audit and notice requirements. While Illinois and Maryland have enacted laws requiring applicant consent prior to using facial recognition software and artificial intelligence to analyze video interviews, the New York City law is the first of its kind to require that employers have their artificial intelligence tools audited.
Specifically, a new law restricts employers’ use of an “automated employment decision tool” to screen a candidate for employment or promotion within New York City. “Automated employment decision tool” is defined as “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 does not provide examples of automated employment decision tools, but it likely includes any software program that uses artificial intelligence or machine learning to evaluate and select candidates for employment, such as tools that screen resumes for key words and rank candidates, as well as tools that use facial recognition software to analyze video interviews. The term does not include “a tool that does not automate, support, substantially assist or replace discretionary decision-making processes and that does not materially impact natural persons.” As a result, a junk email filter, firewall, antivirus software, calculator, spreadsheet, database, data set, or other compilation of data do not constitute an automated employment decision tool.
Employers may not use an automated employment decision tool to screen a candidate for employment (or current employee for promotion) unless two requirements are met. First, the automated employment decision tool must have been subject to a bias audit no more than one year before the tool is used. “Bias audit” is defined as an impartial evaluation by an independent auditor, including at least the testing of an automated employment decision tool to assess the tool’s disparate impact on persons based on race, ethnicity, and sex. The law does not address the qualifications of an independent auditor. Second, before using the automated employment decision tool, employers must make publicly available on their website the results of the most recent bias audit and the distribution date of the tool.
The new law also imposes several notice obligations on employers who use automated employment decision tools. An employer that uses an automated employment decision tool must notify each candidate or employee that resides in New York City and is applying for employment or promotion of the following:
An automated employment decision tool will be used in connection with the evaluation of the employee or candidate. This notice must be made no less than ten business days before the use of the tool and allow a candidate to request an alternative selection process or accommodation. The law does not specify how such notice must be provided, or if a posting is sufficient.
The job qualifications and characteristics that the automated employment decision tool will use in the assessment of such candidate. This notice must also be made no less than 10 business days before use of the tool. The law also does not provide any detail as to how to define or articulate the job qualifications or characteristics.
If not disclosed on the employer’s website, 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 will be available upon written request by a candidate. Such information must be provided within 30 days of the written request, unless the disclosure would violate local, state, or federal law, or interfere with a law enforcement investigation.
These notice requirements appear to be limited to residents of New York City; however, it is not always clear where an applicant resides, so employers may want to consider how to implement these notice requirements to ensure all appropriate individuals are reached. Employers who violate the new law will be subject to civil penalties for each violation of the law. Notably, each day on which an automated employment decision tool is used in violation of the law will constitute a separate violation. The law does not create a private right of action.
While the law does not go into effect until January 1, 2023, employers who use (or are planning to implement) automated employment decision tools should begin to prepare for compliance with these new requirements. For instance, employers should evaluate if any of their recruiting or HR tools constitute automated employment decision tools and connect with the vendors supplying such tools about conducting the required bias audit. If you have any questions regarding compliance with the new requirements, please contact Amanda M. Baker at abaker@fglawllc.com or any attorney at the Firm.
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