New York City Automated Employment Decision Tools Law
January 7th, 2022 | Chris Christian, Director of Compliance
On December 11, 2021, New York City enacted a new law to amend the administrative code of New York City which will regulate employer’s use of automated employment decision tools for hiring or promotion purposes within the city limits. Local Law Int. No. 1894-A which takes effect on January 1, 2023 applies to employers and employment agencies.
The new law makes it unlawful for an employer or an employment agency to use and automated employment decision tool to screen a candidate or employee for an employment decision unless; 1) such tool had been subject a bias audit no more than one year prior to it use and 2) make publicly available a summary of the bias audit on the employer’s website.
The law also requires employer provide specific notices which:
- Notify candidates or employees that an such a tool will be used in connection with the assessment of the candidate or employee no less than ten business days before its use;
- Allow a candidate/employee to request an alternative selection process;
- List the job qualifications and characteristics used by the tool;
- If not disclosed on employer’s website, provide upon written request, information about the type of data collected for the automated employment decision tool, the source of such data and the employers’ data retention policy.
The law defines “automated employment decision tools” 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 term does not include a tool that does not automate, support, substantially assist or replace discretionary decision-making processes and that does not materially impact natural persons, including, but not limited to, a junk email filter, firewall, antivirus software, calculator, spreadsheet, database, data set, or other compilation of data.
It should be noted that Sterling’s tools such as Client Matrix Adjudication for example are not by definition “automated employment decision tools”. Sterling does not make hiring decisions nor does Sterling provide automated tools to assist employers in making hiring decisions.
The law defines “bias audit” to mean an impartial evaluation by an independent auditor. Such bias audit shall include but not be limited to the testing of an automated employment decision tool to assess the tool’s disparate impact on persons of any component 1 category required to be reported by employers pursuant to subsection (c) of section 2000e-8 of title 42 of the United States code as specified in part 1602.7 of title 29 of the code of federal regulations.
Violations of the law may result in civil penalties of $500 to $1,500 for each violation of any of these requirements. The law also provides applicants and employees a private right of action to enforce its provisions.
New York City employers should review their hiring policies and programs in light of the new law. Employers should also consult with their legal counsel when considering updating their background screening and hiring policies and programs.
The full text of Int 1894-A can be found HERE
The Information contained herein is for informational purposes only. Sterling is not a law firm, and none of the information contained in this notice is intended as legal advice. Clients are encouraged to consult with their legal counsel about the impacts of any requirements. This and other important legislative updates can be found on the Sterling website: https://www.sterlingcheck.com/resources/compliance-updates/
Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.