Synopsis of Seyfarth: A new law in New York City restricts the use of artificial intelligence (“AI”) to select applicants for employment or promotion, and will come into effect on January 1, 2023. Although employers have one year to register To prepare, those who intend to rely on AI during the hiring process after January 2023 must submit their AI tools to a ‘bias audit’ now.
Companies that use AI as part of their hiring process should be made aware of the new law in New York City, which will take effect in early January 2023. AI tools can increase the speed and efficiency of job reviews. candidates. However, the New York City legislature, animated by concerns that biases could be built into AI tools, has regulated their use.
On November 10, 2021, the New York City Council passed a bill to restrict the use of “automated employment decision tools” to screen candidates for employment or promotion. In the absence of the signature of Mayor Bill de Blasio, the bill became law thirty days later, on December 10, 2021. The law will come into force on January 1, 2023.
The law will prohibit New York City employers or employment agencies from using automated employment decision tools that significantly aid or replace discretionary decision-making processes to assess candidates for a position, unless the The tool has undergone a “bias audit” in the year prior to its use. The term “automated job decision tools” is defined to include any automated process that uses machine learning, statistical modeling, data analysis, or artificial intelligence to score or rank candidates or make job decisions. job based on the candidate’s credentials. In addition, a bias audit will consist of an assessment of the potential impact of the tool on the individuals protected by an impartial auditor. The law, however, does not specify who should be considered an independent auditor capable of making an impartial assessment of the AI tool. Employers who intend to use AI tools in their hiring process after January 1, 2023 must submit those tools to a bias audit and make the results available for public inspection in 2022.
In addition, the law includes strict notice requirements. When it comes into force, employers who use automated employment decision-making tools must notify all candidates residing in the City that these tools will be used to assess their candidacy. In light of this requirement, employers should be aware of obtaining residential information from applicants, as the notice is limited to those who reside in the city. Additionally, notice must be given at least ten business days prior to using the AI tool to ensure applicants have an adequate opportunity to “request another selection process or accommodation”. While the law does not include a list of suitable alternatives, it makes sense to assume that an alternative process not involving the use of AI would be acceptable.
In addition, to the extent not otherwise disclosed, “information on the type of data collected” for the tool, the data source and the employer’s data retention policy must be provided in the 30 days following a written request from an employee or candidate.
In addition, the law imposes costly penalties on non-compliant employers. Employers who violate any provision of the law can be fined up to $ 500 for a first violation. However, subsequent infractions can result in a fine of up to $ 1,500. Fines can add up quickly, as each day the AI tool is used in violation of the law counts as a separate violation, and the law is silent on the maximum amount of penalties that can be imposed. Although the New York City Corporation Counsel (or its representative) has been appointed to enforce the new law and the law does not create an independent private right of action, the law does not prevent an employee or candidate from bringing a private civil action under a different statute.
Likewise, concerned about the use of AI tools when hiring, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced a new initiative on October 28, 2021 to ensure that use of AI complies with federal non-discrimination laws. The EEOC has announced that it plans to provide updated guidance for employers to better navigate the use of AI when hiring. At the time of writing this alert, the EEOC had not yet done so.
Seyfarth will continue to monitor any development with New York City’s artificial intelligence in hiring restrictions and updated EEOC guidelines, and will provide updates as they become available.