NYC Issues Guidance for the Use of Automated Employment Decision Tools

As we reported in previous alerts, New York City enacted a law imposing restrictions on NYC employers who use Automated Employment Decision Tools (“AEDTs”) to make employment decisions. The law went into effect on January 1, 2023, and enforcement began on July 5, 2023, by the NYC Department of Consumer and Worker Protection (“DCWP”). As DCWP’s enforcement obligations ramp up, the agency released an FAQ document, providing guidance on the requirements of the new law. This guidance supplements the rules implementing the law that were published by DCWP earlier this year.

The law prohibits employers and employment agencies from using an AEDT in NYC unless they ensure a bias audit of the AEDT was performed and provide notice that the employer is utilizing an AEDT in employment decisions to NYC applicants and employees. Under the law, an AEDT is “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 employment decisions that impact natural persons.”  

While the FAQs largely track the text of the law and rules published by DCWP, they do offer some additional guidance on the scope and coverage of the law. For example, the rules previously clarified that a tool is not an AEDT unless, in using the tool to make an employment decision, the  employer is: (1) relying solely on a simplified output from the tool (for instance, a score, tag, classification, ranking, etc.) with no other factors considered; (2) using a simplified output as one of a set of criteria where the simplified output is weighted more heavily than any other criterion in the set; or (3) using a simplified output to overrule conclusions derived from other factors including human decision-making. The FAQs further narrow the reach of the law, noting that the requirements of the law do not apply if an employer is using an AEDT to scan a resume bank, conduct outreach to potential candidates, or invite applications. Rather, the bias audit and notice requirements only apply if the AEDT is used to assess someone who is being considered for a promotion or who has applied for a specific position with the employer. However, the FAQs do note that the law applies to the use of an AEDT to assess or screen candidates at any point in the hiring or promotion process, not just at the point the final hiring decision is made.

The FAQs further clarify the geographic scope of the law, which states only that it applies to the use of AEDTs in NYC. The FAQs explain that the law’s requirements apply if (1) the job location is an office in New York City, at least part time, or (2) the job is fully remote, but the location associated with it is an office in NYC.

The law prohibits employers from using an AEDT unless the AEDT has been the subject of a bias audit within the past year and the results of that audit are publicly available on the employer’s website. The FAQs state that while employers must facilitate a bias audit, the law does not require any specific actions based on the results of a bias audit, even if the results of the bias audit seem to indicate that the AEDT has a disparate impact. However, the FAQs note that employers must comply with federal, state, and NYC laws prohibiting discrimination and determine if any actions based on the results of the bias audit are necessary under those laws. In addition, the FAQs direct individuals to submit complaints about violations of the AEDT law to DCWP, and complaints about discrimination involving AEDT use to the NYC Commission on Human Rights. The DCWP will also refer any discrimination complaints it receives to the NYC Commission on Human Rights.

Employers utilizing an AEDT should act quickly to ensure compliance with the bias audit and notice requirements given that enforcement of the law is now underway. Employers with any questions about NYC’s AEDT law, including whether a tool utilized in employment decisions qualifies as an AEDT, should contact Kate Townley at ktownley@fglawllc.com or any other attorney at the Firm.

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