New York City employers beware: Big Apple issues final rule governing AI tools used to screen job applicants (other cities are sure to follow suit)


At this point in the development of AI technology, despite the endless debate about AI having nothing less than far-reaching implications for humans in general, we all seem to agree on one small point. Using AI models in the workplace to evaluate hiring, firing, and other employment decisions in between can be — to say the least — a lot.

We recently reported on some of the top issues employers using AI may face — from coding human bias into AI models to keeping up with the rapidly evolving federal regulatory landscape. Similarly, employers using AI should be aware of and up to date with the many state regulations intended to regulate and limit the use of AI in the recruiting and hiring process. For example, Illinois and Maryland have both enacted laws that require employers to disclose to job applicants if their job candidates will be evaluated by AI tools and require employers to seek prior consent from candidates for such use.

It appears that city governments are also now getting in on the regulatory action. Earlier this month, the New York City Department of Consumer and Worker Protection (DCWP) announced that Local Law 144 would go into effect after several delays to allow public hearings and comment on the implementing legislation. In the year By 2021, it will regulate the use of “automated employment decision tools” (AEDTs) and require them to be audited for discrimination before they are used. Enforcement under the DCWP will begin on July 5, 2023. Final rule. The implementation of this new law will certainly add more uncertainty and risk to employers using AI recruiting tools in New York City. And, as other cities and local governments follow suit, which they often do, New York City’s law could eventually hurt employers across the board.

The DCWP Enforcement Act provides pages of detailed explanations of what July 5 requires and how employers can comply with Local Rule 144 – often containing illustrative examples. At a high level, the rule does the following:

  • When Local Law 144 regulates the use of AEDT, it explains what it means by “significantly assisting or replacing competency-based decision-making in making employment decisions affecting natural persons”. In particular, as the DCWP law explains, the instrument “is a simple result (point, label, classification, level, etc.) on which only the employer can rely and without other reasons” an AEDT rule can be issued. The employer gives too much weight and value.
  • Clarifies that regulated AEDTs must be audited for bias within one year before being used. Such audit shall be conducted independently and shall include the calculation of the “voting rate” and “influence ratio” for each gender, race, and ethnic group, as well as for each segment. In other words, the auditor should look at the total number of applicants in each category relative to the number of applicants selected and determine how often that type of applicant is selected. The audit must be repeated annually for as long as the AEDT is used.
  • Specifies the manner in which audit results should be presented. Once the audit is completed, the results must be made public in a “clear and transparent manner” on the employment section of the employer’s website. These results must be available for at least six months from the last time the audited AEDT was used.
  • It outlines the ways in which an employer must notify candidates and employees that the AEDT will be used in connection with the assessment of the application. Notice can be given on the employer’s website or in a job advertisement or by mail (in certain cases).

While the DCWP Act is definitive in many respects, it leaves some fundamental questions unanswered. For example, it is unclear how an employer will comply with the publication of audit results requirements if it does not maintain a public website. Similarly, the rule does not address how to handle information related to candidates who do not self-report their gender, race, or ethnicity for the purposes of required independent audits. These and other questions may cause confusion in the near future and create an environment for future litigation.

Regardless, it is clear that employers must begin preparing to implement Local Rule 144 by determining whether any of the tools employers use to screen job candidates qualify as ADT. Uncertainty about the future.

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