New York City will begin enforcing its new law that regulates the use of AI in hiring tools, on July 5, 2023.
The city has delayed enforcement of the new law, called Local Law 144, since January, due to confusion over the implementation of bias audits in AI systems that employers use for screening job candidates.
The law mandates that employers must inform job candidates beforehand if they use automated hiring systems and conduct a yearly bias audit of these systems. Any tool that uses machine learning or AI with data analytics to evaluate candidates for employment is defined as an automated hiring tool under this law.
New York City is now among the first in in the United States to create regulations for the use of artificial intelligence in employment decision making.
Washington, D.C., recently introduced The Stop Discrimination by Algorithms Act of 2023, which would prohibit algorithmic discrimination by employers and require service providers to ensure that their AI tools are compliant with the law. The D.C. Council is currently considering the measure.
In New York City, employers under the new law must notify job candidates, and employees based in the city who are candidates for promotions, at least ten business days before screening them with automated hiring tools.
An external auditor must perform a yearly bias audit of the hiring tool to evaluate whether it shows any discriminatory biases towards protected classes such as race, sex, and ethnicity. Employers must provide a summary of the audit on their website, along with information about the data they collect, its source, and how long they will retain it.
Employers found in violation of the law would face penalties of $500 to $1,500 per day that the system was in use.
Potomac Legal Group is closely following the fast-changing regulatory landscape of artificial intelligence in employment matters. If you are seeking to understand your rights or obligations in relation to AI laws and regulations, then contact us today to schedule a consultation.