New York City Will Soon Regulate Use Of Artificial Intelligence In Employment Decisions – Employee Rights/ Labour Relations

New York City Will Soon Regulate Use Of Artificial Intelligence In Employment Decisions – Employee Rights/ Labour Relations


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On January 1, 2023, New York City employers will have to comply
with a new law aimed at preventing bias in artificial intelligence
hiring tools. These tools, which include algorithms and software
geared towards finding ideal candidates, have come under fire in
recent years for their potential to unlawfully discriminate against
protected classes.

Employer Obligations

The New York City law, Local Law Int. No. 1894-A, specifically
regulates the use of “automated employment decision
tools” in making employment decisions, including “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 protects candidates and employees interviewing and
working in New York City and provides that an automated employment
decision tool may not be used to screen such candidates for
employment and promotion unless the tool: (i) has been subject to a
“bias audit” conducted no more than one year prior to the
use of such tool; and (ii) a summary of the results of the most
recent bias audit of such tool, as well as the distribution date of
the tool, have been made publicly available on the website of the
employer or employment agency prior to the use of such tool. A bias
audit is an “an impartial evaluation by an independent
auditor,” and includes, without limitation, “the testing
of an automated employment decision tool to assess the tool’s
disparate impact on persons of any [gender, race and job level]
required to be reported by employers [on the Employer Information Report EEO-1] pursuant to
[federal law].” Notably, the law does not state who or what
qualifies as an “independent auditor.”

The law also requires that the New York City employer or
employment agency satisfy certain notice requirements. First, the
employer or employment agency must, no later than ten (10) days
before such use, notify a candidate or employee that resides in New
York City of (i) its intent to use an automated employment decision
tool; and (ii) the job qualifications and characteristics that such
automated employment decision tool will use in the assessment of
such candidate or employee. The 10-day period is meant to allow the
candidate or employee time to request an alternative process or
accommodation. However, the law does not obligate an employer or
employment agency to provide an alternative process or
accommodation. Second, if information about the type of data
collected from the automated employment decision tool is not
disclosed on their website, an employer or employment agency must
make available to a candidate or employee within 30 days of
receiving a written request, the following: (i) information about
the type of data collected for the automated employment decision
tool; (ii) the source of the collected data; and (iii) the employer
or employment agency’s data retention policy.

Penalties

Employers or employment agencies that violate this new law will
incur a civil penalty of up to $500 for the first violation (and
each additional violation occurring on the same day as the first
violation), and a civil penalty between $500 and $1,500 for each
subsequent violation. The law provides for separate violations (i)
each day on which an automated employment decision tool is used in
violation of the law; and (ii) each time an employer or employment
agency fails to provide proper notice under the law. In other
words, these relatively minor penalties can multiply on a daily
basis for employers that fail to correct issues violative of the
law.

Analysis and Recommendations

There are several issues with this law that remain unclear.
First, employers have no guidance on whom or what they should rely
to audit their automated employment decision tools in order to
comply with the law. The only requirement is that the auditor be
“independent.”

Second, these independent auditors have no guidance by which to
ensure employers are compliant with the law. At present, the city
has not issued any guidance of its own. Employers and auditors
could refer to the U.S. Equal Employment Opportunity Commission
technical assistance document
that covers artificial
intelligence hiring tools, though it is not presently known whether
the city intends to use this guidance or issue some of its own.

Third, the 10-day notice requirement appears from the law’s
text to apply only to candidates or employees living in
New York City (whereas the rest of the law seems to apply to any
candidate or employee interviewing with or working for a New York
City employer, regardless of residence). This limitation is likely
negligible from a practical standpoint, however, as notice will
most likely be made through the website of an employer or
employment agency subject to the law.

Fourth, employers are not obligated to change the use of their
automated employment decision tools simply based on a request from
a candidate or employee, which leaves an open question regarding
how such requests and responses will be treated or evaluated.

While we await answers to these questions, we encourage New York
City employers to ensure that any automated employment decision
tools they intend to use in 2023 undergo a bias audit by an
independent auditor. The result of these bias audits should then be
made available on New York City employers’ websites. We further
encourage New York City employers to work with employment counsel
to develop and implement practices compliant with the notice
provisions of the new law.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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