NYC to Regulate Artificial Intelligence-Based Hiring Tools
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On November 10, 2021, the New York City Council passed a bill prohibiting employers and employment agencies from using automated employment decision tools to screen candidates or employees, unless a bias audit has been conducted prior to deploying the tool (the “Bill”).

The Bill defines an “automated employment decision tool” as any computational process (either derived from machine learning, statistical modeling, data analytics, or artificial intelligence) that issues a simplified output (e.g., a score, classification or recommendation) to substantially assist or replace human decision-making for employment decisions that have an impact natural persons.

Under the Bill, use of such a tool is permissible if it has been the subject of a bias audit (i.e., an impartial evaluation by an independent auditor, conducted no more than one year prior to the use of the tool) and a summary of the audit results are made publicly available on the website of the employer or employment agency before deployment of the tool. Moreover, employers or employment agencies are required to provide notice to employees or candidates residing in NYC that an automated employment decision tool will be used to assess or evaluate their candidacy, no less than ten business days before using the tool. Candidates also have the right to request an alternative selection process or accommodation under the Bill.

The Bill prescribes penalties if businesses do not comply, ranging from a fine of $500 for a first violation to fines of up to $1,500 for any additional violations. Failure to provide notice of the use of automated employment decision tools constitute a separate violation.

Although New York City Mayor Bill de Blasio supported the Bill, it automatically lapsed into law without a mayoral signature. The Bill takes effect on January 2, 2023.


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