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Automated Employment Decision Tools

NYC’s Automated Employment Decision Tools Ordinance Takes Effect

By John DiGiacomo

If you do not already know, many employers — both large and small — use Automated Employment Decision Tools (“AEDT”) when making hiring decisions. Automated Employment Decision Tools may be as simple as using screening software to eliminate applicants with an insufficient number of years in the industry or an inadequate level of schooling/training for the job position. Or, AEDT may involve something much more complicated like having an artificial intelligence/machine learning software program evaluate aspects of a video applicant interview.

Lawmakers nationally have been worried and concerned about Automated Employment Decision Tools for several years. The concern is that the software programs are using historical data and inputs that, in reality, end up masking bias and invidious discrimination. For example, if the software tools eliminate certain universities and colleges, does that actually disproportionately eliminate certain applicants of various demographic groups that have faced historical discrimination?

In response, a couple of years ago, NYC lawmakers passed an Ordinance — known as Local Law 144 — which is aimed at preventing AEDT from subtly subverting efforts to end discrimination. Local Law and its attendant regulations went into effect on July 5, 2023.

Under Local Law 144 and rules promulgated by the NYC Department of Consumer and Work Protection, the definition of AEDT is very broad. AEDT is defined as any process or method that is “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” with respect to hiring-related decisions. If an NYC employer is using any type of Automated Employment Decision Tools, Local Law 144 requires a professional, independently conducted, detailed, and written assessment to be made of the tools being used. This written assessment is called a “bias audit.” AEDT cannot be used if the bias audit demonstrates any inherent discriminatory bias in the specific tools being used. There is a continuing duty to ensure that AEDT is non-biased. Thus, the bias audit must be done annually. Further, the results of the bias audit must be published by the employer (for example, on their website).

Local Law 144 also requires notice and an “opt-out” for any applicant. Thus, if Automated Employment Decision Tools is being used (and if the bias audit confirms that the tools do not discriminate), then Local Rule 144 requires the following notice to applicants (which must be provided at least 10 days before the tools are used):

  • Notice that AEDT is being used or will be used
  • Notice of what AEDT will be used to evaluate — that is, what job-related qualifications/requirements are being assessed by the AEDT
  • Notice of the data/information source (or sources) being used as inputs
  • Notice of the type of AEDT being used
  • Notice of the employer’s data/information retention policy and
  • Notice to the applicant that the applicant can ask for an alternative means of assessment — that is, an “opt-out” from having AEDT used; considered to be an “accommodation” under other labor and non-discrimination laws.

Violations of Local Law 144 can result in civil penalties of up to $375 fine per violation. Subsequent violations receive high penalties. Each part of the Law carries separate and distinct penalties. Most importantly, violations of Local Law 144 can be deemed violations of other laws resulting in fines, penalties, and punishments under those statutes.

Contact the Business and Employment Attorneys at Revision Legal For more information, contact the experienced Business and Employment Lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.

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