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The New York City Department of Consumer and Worker Protection (DCWP) has granted New York City employers a happy holiday, indeed. The Department just announced it will delay the enforcement of its automated employment decision tools law (Local Law 144 of 2021) until April 15, 2023, and is planning a second public hearing due to the high volume of public comments.

Why is this good news for New York City employers?

Until the announcement, New York City employers who use artificial intelligence in employment decision-making were faced with new requirements beginning January 1, 2023–including a prohibition against using automated employment decision tools (AEDTs) unless they took a number of specific steps prior to doing so, not the least of which would be conducting a bias audit of their AEDTs. (See our prior video chat Artificial Intelligence in Recruitment and Hiring: Checking Your Blind Spots, where we discussed Local Law 144 and other recent AI laws employers should be aware of.)

Specifically, Local Law 144 requires employers to: (1) subject AEDTs to a bias audit within one year of its use; (2) ensure that the results of such audits are publicly available; (3) provide particular notices to job candidates regarding the employer’s use of these tools; and (4) allow candidates or employees to potentially request alternative evaluation processes as an accommodation.

What are AEDTs?

Good question. The DCWP proposed rules on September 23, 2022 that would clarify what an AEDT is (as well as expand upon Local Law 144 and regulate the use of AEDTs). Under the proposed rules, an AEDT likely includes any computerized tool or algorithm-based software program used to identify, select, evaluate, or recruit candidates for any employment position.

It may include data-driven tools used to review résumés, rank applicants, “chat” with applicants, assess employee performance and productivity, monitor field-based or remote employees, or determine compensation and promotions. The proposed rules exclude from the definition “analytical tools that translate or transcribe existing text,” e.g., convert a resume from a PDF or transcribe a video or audio interview.

What’s required for the bias audit?

The proposed rules set forth the minimum requirements for a bias audit of an AEDT, which include: (1) calculating the “selection rate” for each race/ethnicity and sex category that is required to be reported to the Equal Employment Opportunity Commission pursuant to the EEO 1 Component report; and (2) calculating the “impact ratio” for each such category. The proposed rules define “selection rate” as the “rate at which individuals in a category are either selected to move forward in the hiring process or assigned a classification by an AEDT,” and “impact ratio” as either: (1) the selection rate for a category divided by the selection rate of the most selected category; or (2) the average score of all individuals in a category divided by the average score of individuals in the highest scoring category.

In addition, the proposed rules indicate that an intersectional analysis (an analysis of the impact rate for ethnicity and sex combined, in addition to each protected category independently) must be conducted.

However, with a delayed enforcement date and the likelihood of a second public hearing, the current proposed rules may be revised. Employers should keep close watch and check back here for developments.

What should New York City employers do now?

There are some steps employers should consider to get a head-start on the enforcement of Local Law 144. Employers using AEDTs within New York City should:

  • Review Local Law 144 and the current proposed rules;
  • Assess what categories of automated tools and technologies the employer uses in its workplace decision-making schemes, and work with counsel to determine how the law applies;
  • Ensure that required notices are effectively provided and that the employer will be able to comply with independent bias audit requirements;
  • Review the employer’s practices regarding data retention; and
  • Work with third-party vendors to ensure their compliance with the new law, as necessary, and make any desired updates to service agreements.

For help preparing for enforcement of Local Law 144 or any of your other employment needs, contact your Baker McKenzie employment attorney.