New York City recently promulgated a set of Frequently Asked Questions (“FAQs”) to clarify the New York City Local Law 144 (the “NYC AI Law”) regulating the use of automated employment decision tools (“AEDT”), as well as the Final Rules that were issued by the New York City Department of Consumer and Workplace Protection (“DCWP”) on April 6, 2023. While the NYC AI Law has technically been effective since January 1, 2023, New York City delayed enforcement of the law to July 5, 2023. The FAQs provide insight into several key areas of the NYC AI Law, as discussed below.

AEDT Defined

AEDT is a computer-based tool that:

• uses machine learning, statistical modeling, data analytics, or artificial intelligence;
• helps employers and employment agencies make employment decisions; and
• substantially assists or replaces discretionary decision-making.

To provide employers with a better understanding as to when they can tell if a tool is using machine learning, statistical modeling, data analytics, or artificial intelligence, the FAQs explain that the NYC AI Law applies to AEDT if it generates a “prediction” or a “classification” and identifies the input, relative importance of the inputs, or any other parameters to improve the accuracy of the generated prediction or classification. A “prediction” includes an “assessment of a candidate’s fit or likelihood of success.” A “classification” is an “assignment of an observation to a group, such as categorizations based on skill sets or aptitude.”

Colloquially, technologies that are regulated by the NYC AI Law include those that use algorithms to analyze resumes, assessment platforms that evaluate applicants on skill sets, traits, or aptitude, and chatbots that conduct interviews.

Resume Banks and Outreach to Candidates

The FAQs note that the NYC AI Law’s requirements do not apply to the use of an AEDT to scan a resume bank, conduct outreach to a potential candidate, or invite applications. The law solely applies to AEDT used to assess candidates who have applied for a specific position or for a promotion.

AEDT Use “In The City”

The new guidance explains that the New York City AI Law applies only to employers that use AEDTs “in the city.” The FAQs define “in the city” to mean one of the following:

• the job location is an office in New York City, at least part time;
• the job is fully remote, but the location associated with it is an office in New York City; or
• the location of the employment agency using the AEDT is in New York City or, if the location of the employment agency is outside NYC, one of the bullets above is true.

If the AEDT is used “in the city” under the above guidelines, then a bias audit of the AEDT must be completed before its use and job candidates who are New York City residents must receive notice that the employer uses the AEDT.

General Bias Audit Requirements

A bias audit is an impartial evaluation by an independent auditor that includes calculations of selection or scoring rates and the impact ratio on sex categories, race/ethnicity categories, and intersectional categories of sex, ethnicity, and race. The NYC AI Law does not require employers to stop using an AEDT if the results of a bias audit seem to indicate a disparate impact against a particular group or groups. Nevertheless, employers should speak with counsel when reviewing the results of a bias audit to assess whether to discontinue the use of an AEDT in that scenario.

Notably, employers must share a summary of the results of their annual bias audit with the public, along with the date the employer began using the AEDT, by posting this information on their website or hyperlinking to a separate website with this information.

The summary of results mentioned above must include:

• the date of the most recent bias audit of the AEDT;
• the source and explanation of the data used to conduct the bias audit;
• the number of individuals the AEDT assessed that fall within an unknown category; and
• the number of applicants or candidates, the selection or scoring rates, as applicable, and the impact ratios for all categories.

Data Requirements

A bias audit must use historical data, which is collected during an employer’s use of an AEDT to assess individuals for hiring and promotion. If there is insufficient historical data to conduct a bias audit, employers can instead use historical data of other employers or test data. A bias audit can use and rely on historical data of multiple employers that use the same AEDT only if the employer provided historical data from their use of their AEDT to the independent auditor conducting the bias audit or it is the first time the employer is using the AEDT.

Notice Requirements

As discussed above, employees and applicants who are New York City residents must receive notice that the employer is using an AEDT, as well as details surrounding the job qualifications or characteristics the AEDT will assess.

Employers must:

• include instructions in the notice to request a reasonable accommodation under other laws;
• provide the notice ten business days before using an AEDT; and
• provide the notice in a job posting or by mail or email. Note:
  • For job applicants: As an alternative, employers can provide notice on the employment section of their website. Notice on a website does not have to be position-specific.
  • For candidates for promotion: As an alternative, employers can include notice in a written policy or procedure. Notice provided in this way does not have to be position-specific.

Employers may begin using the AEDT ten business days after posting notice on their website regardless of when a specific job is posted.

Takeaway

The FAQs are very detailed and shed necessary light on the Final Rules and the NYC AI Law. Employers that post jobs that meet one of the “in the city” requirements described above should carefully review the FAQs to ensure compliance. Employers should also contact counsel prior to using an AEDT to avoid running afoul of this complex law.