On July 5, 2023, New York City implemented regulations to address the use of "Automated Employment Decision Tools" (AEDTs) with the enforcement of Local Law 144. This regulation mandates a more transparent, fair, and unbiased use of AI in hiring and promotion processes within the city's jurisdiction.
What Constitutes an AEDT?
Defined broadly, an AEDT encompasses computational processes rooted in machine learning, statistical modeling, data analytics, or artificial intelligence that substantially assist or replace discretionary decision-making in employment contexts. This law targets tools ranging from resume screening software to automated onboarding platforms, aiming to standardize their usage across the employment spectrum.
Core Requirements of Local Law 144
Mandatory Bias Audits: A cornerstone of the law is the annual bias audit requirement for each AEDT, performed by an independent auditor. This audit assesses potential disparities in decision-making based on race, ethnicity, sex, and other protected categories.
Transparency Through Notification: Employers must inform job candidates and employees at least ten business days prior to an AEDT's usage. This notification should detail the tool's function, its role in the decision-making process, and available alternatives for assessment.
Public Disclosure of Audit Results: The law necessitates that the findings of each bias audit be publicly available, ensuring that the outcomes and any corrective measures taken are transparent.
Key Updates and Clarifications
Refining Data Source Guidelines for Bias Audits: Recent amendments specify acceptable data types for bias audits, delineating "historical data" as information collected during an AEDT's employment assessment phase. If historical data proves insufficient, "test data" may be used, subject to stringent criteria to ensure its relevance and reliability.
Independent Auditor Criteria: Updated rules establish clear criteria for what constitutes an "independent auditor", emphasizing impartiality and excluding any party with a direct or indirect financial interest in the AEDT's development, distribution, or usage.
Enhanced Bias Audit Requirements: The revised regulations require bias audits to calculate selection rates, impact ratios for specified categories, and ensure the auditor's independence. This aims to create a more robust framework for identifying and mitigating bias within AEDTs.
Implications for Employers and Employment Agencies
Employers and employment agencies operating within New York City should align their practices with these updated rules, ensuring their AEDTs meet the regulatory requirements imposed by Local Law 144..