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New York City Prepares for Enactment of Law to Regulate Use of Automated Hiring Tools

In recent years many employers have started to use Artificial Intelligence (“AI”) software to automate various aspects of the recruiting and hiring process.  But beware, these tools are facing scrutiny by regulators over the possibility of bias or discrimination against women and minorities. To combat this, effective January 1, 2023, New York City employers will be prohibited from using automated employment decision screening tools unless they have met certain requirements and undergone a biased audit.  NYC’s Automated Employment Decision Tools (“AEDT”) law will set new standards for employers using AI tools in making employment decisions. 

AEDT is intended to provide clarity on how to fairly and legally use AI in the hiring process. It will also provide guidance to AI software developers and auditors.  

As of January 1st, NYC employers who use AI in the hiring process must implement the following processes or face civil penalties: 

  1. Provide notice to applicants and employees of: 
  • the use of AI in the assessment for hire or promotion;  
  • the job qualifications and characteristics assessed by the AI tool; and  
  • the data that AI will collect. 
  1. The AI software must: 
  • clear a “bias audit;” and  
  • the designer must make publicly available a summary of the bias audit results.  

It is important for employers to note, the bias audit must be conducted by a third-party auditor and designed to meet certain legal requirements contained in the AEDT. 

While some employers argue the AEDT is an unnecessary burden, others see AEDT as much needed guidance for employers, auditors, and AI developers, by setting clear standards for the industry to follow. It is also anticipated that AEDT will provide compliant employers with a defense to legal actions of discrimination claims, especially as they may be related to the use of AI. 

Employers who violate the law will be subject to fines of up to $500 for a first violation and each additional violation occurring on the same day as the first violation, and between $500 and $1,500 for each subsequent offense.  

This article is written as a brief overview of NYC’s new AEDT law.  It is not intended as legal advice.  If you need help in complying with this new law or any other employment matters, Brody and Associates can help. Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.