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NYC delayed a law that was set to go into effect on Jan 1 to April 15, 2023. The Law represents the City Council's first attempt to examine and regulate the use of artificial intelligence ("AI") in hiring, promotional, and other employment decision-making processes.
The Law regulates employers and employment agencies’ use of “automated employment decision tools” on candidates and employees residing in New York City, and vaguely defines “automated employment decision tool” 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 requires employers and employment agencies' to conduct an annual basis audit; and publicly publish a summary of the results of the most recent bias audit and distribution data for the AI tool on the employer or employment agency’s website. The Law also requires employers and employment agencies to satisfy a number of notice requirements and disclosure requirements.
Violations will result in liability for a civil penalty of up to five-hundred ($500) dollars for the first violation and each additional violation occurring on the same day as the first violation; and a civil penalty between five-hundred ($500) and one thousand and five-hundred ($1,500) dollars for each subsequent violation. It is important to note that each day the AI tool is used in violation of the Law constitutes a separate violation and the failure to provide any of the required notices constitutes a separate violation.
Employers or Employment agencies with candidates or employees, who reside in New York City, should ensure that any covered automated employment decision tool that they plan to use in 2023 or thereafter is compliant with the law. The attorneys at Outside Legal Counsel LLP can help.
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