HR

NYC's Local Law 144: How will the Regulation Impact Artificial Intelligence Tools?

Published On
February 2, 2024
Read Time
3 Minutes
Author
OnBlick Inc

As NYC Local Law 144 enforcement is now in effect, businesses and employers in New York City are proactively addressing the implications of this ground-breaking regulation. The law, which governs the use of Artificial Intelligence (AI) tools in employment decisions, requires organizations to be well-informed about its scope and requirements.

In this blog, we’ll delve into the details of Local Law 144 and explore how it may impact businesses that use AI-powered tools.

What are AETDs?

A key aspect of understanding NYC’s Local Law 144 is grasping the concept of Automated Employment Decision Tools (AEDTs). These tools play a central role in the law’s regulatory framework and require careful consideration for employers.

AEDTs are defined under Local Law 144 as “any computational process, 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 for making employment decisions that impact natural persons”. The primary objective of this definition is to address the usage of AI-driven tools that significantly influence or replace human decision-making in the hiring process.

Exclusions from the Definition

It’s essential to note that Local Law 144 explicitly excludes certain tools from the AEDT definition. For instance, tools that do not automate, support, substantially assist, or replace discretionary decision-making processes, and those that do not materially impact natural persons, are not considered AEDTs under the law. Such excluded tools include junk email filters, firewalls, antivirus software, spreadsheets, or other data compilation tools.

Clarifying the Scope of AI Technologies

To provide further clarity on the tools and processes falling within the AEDT definition, the regulations implementing the local law included a definition for the terms “machine learning, statistical modeling, data analytics, or artificial intelligence”. This addition delineates which AI technologies are subject to the law’s requirements, ensuring a precise understanding for employers and compliance experts.

What is the Local Law 144 rule in NYC?

Local Law 144 was passed by the New York City Council in November 2021, addressing concerns surrounding using AEDTs. The law’s primary objective is safeguarding job opportunities within New York City. As such, it applies to roles physically located in NYC and remote positions for employers with a New York office. Employers with offices both within and outside of NYC must conduct a thorough analysis to determine the law’s applicability to remote employees.

Key Conditions under Local Law 144

To ensure compliance with Local Law 144, employers utilizing AEDTs must adhere to two critical conditions:

1. Bias Audit: Employers are required to conduct a bias audit regarding the tool’s usage, focusing on Gender & Race/Ethnicity, and intersectional analysis. This audit must be performed annually by an independent auditor, and the results must be published on the employer’s website to promote transparency.

2. Employee Notice: Employers must inform their employees and candidates about the use of AEDTs, providing clear instructions on how to request alternative processes or accommodations. At least ten days before using an AEDT, notice must be provided either on the employment section of the website, in a job posting, or via mail or email to potential candidates.

Note: Violations of NYC 144 include civil penalties of not more than $500 for a first violation and each additional violation occurring on the same day as the first violation, and not less than $500 nor more than $1,500 for each subsequent offence.

Summing Up

Local Law 144 establishes a significant precedent in regulating the use of AI tools in employment decisions, promoting fairness and equal opportunities for job applicants. As the law takes effect, organizations must proactively adapt their hiring practices to ensure compliance while embracing the benefits of innovative AI-powered solutions in talent acquisition. Collaborating with legal advisors and staying up-to-date with developments in this area will be vital in maintaining a compliant and inclusive hiring process for businesses operating in New York City.

Presently, OnBlick ATS believes its searching and matching tools are unlikely to qualify as AEDTs under Local Law 144. The system’s algorithms rely on inputs defined or selected by human recruiters, ensuring they do not independently evolve based on computer computations. However, we strongly encourage OnBlick Applicant Tracking System users to consult their legal advisors to ensure complete compliance with Local Law 144. Our ATS team remains available to assist users throughout this process, providing valuable insights and support.

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