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New York City passed Local Law 144 in 2021 to regulate the use of automated hiring tools and address concerns over algorithmic bias. It took effect in January 2023. As talent acquisition teams increasingly rely on technology to screen and assess candidates, the regulation aims to provide oversight and transparency.
With the rise of new AI capabilities like chatbots acting as screening tools, the law lays the foundation for governance amid ongoing advancements. It mandates transparency and regular audits for any “automated employment decision tool” (AEDT) used to evaluate job seekers in NYC.
This guide offers talent acquisition professionals a comprehensive yet concise overview of Local Law 144. In it you’ll find:
- Key definitions
- Clear explanations of legal requirements
- Guidance on achieving compliance as your organization adapts.
We’ll also explore implications for AI and other emerging generative technologies throughout.
Equipped with the right information, your team can continue leveraging the best innovations while upholding fairness and equal opportunity. Read on to navigate this complex regulatory environment with confidence.
Automated Employment Decision Tool (AEDT)
The law defines an AEDT as any computational model derived from machine learning, statistical modeling, data analytics or artificial intelligence that issues a simplified score, classification or recommendation. This score or classification substantially assists or replaces human discretionary decision-making in making employment decisions that impact candidates.
Key notes on this definition:
- Includes chatbots, unstructured video interviews and other AI-enabled tools that provide evaluations of candidates
- Does not include spam filters, firewalls, anti-virus software or other systems unrelated to employment decisions
An independent evaluation testing for disparate impact of an AEDT across different demographics. At minimum, a bias audit must analyze outcomes across gender, race/ethnicity and intersectional groups.
The law defines employment decisions broadly to include any part of the hiring, promotion or screening process that uses an AEDT to substantially assist or replace human decision making.
Other Key Terms
- Distribution date: When an employer or agency began using a particular version of the AEDT
- Historical data: Data collected from actual past use of an AEDT to assess candidates
- Test data: Sample data used to simulate AEDT performance where historical data is lacking
Requirements of the Law
Local Law 144 sets specific regulations for employers and employment agencies using automated hiring tools to evaluate job candidates in New York City. This section outlines key requirements and compliance obligations.
When Does NYC Local Law 144 Apply?
- The job location is an NYC-based office, either full-time or part-time
- The job allows remote work but the posting/hiring team is NYC-based
- An external recruitment agency using AEDTs has offices located in NYC
In other words, if a company or agency based in NYC uses an automated tool to evaluate applicants for a job also based in NYC (either fully onsite or hybrid/remote), Local Law 144 requirements applies.
NYC Local Law 144 Compliance
Four key requirements apply to your business if all three conditions are met:
- An independent bias audit must be completed on any AEDT prior to its use and at least once per year
- Results must show evaluations across gender, race, ethnicity and intersectional groups
- A summary must be published showing methodology and outcomes
- Employers/agencies must share summary results and distribution date of the audited AEDT version
- This reporting can be achieved via website or active hyperlink
Notices to Candidates
- NYC-based candidates must receive notice that an AEDT is in use
- This notice must be provided 10+ business days before the tool is used to evaluate them
- Financial penalties for violations range from $500 to $1,500 per affected candidate
Taken together, these obligations aim to foster accountability, transparency and informed consent around AEDT usage.
How to Meet Requirements for NYC Local Law 144
Once an employer or agency triggers Local Law 144’s provisions, they must take steps to meet compliance obligations. This section provides detail on carrying out two key requirements: valid bias audits and proper candidate notices.
Conducting a Valid Bias Audit
Fulfilling the bias audit requirement involves specific protocols:
Historical Data Collection
- Auditors must use past data from the AEDT’s actual usage to evaluate candidates from the same organization
- If lacking internal historical data, employers can contribute data to third party audits across multiple companies using the same hiring tool
- Auditing analysis must be performed by an objective third party without financial ties to the hiring company or AEDT vendor
- Outcomes must be measured across gender, race, ethnicity and intersectional groups
- Any group representing less than 2% of assessment data can be excluded
- If historical data is insufficient, simulated test data may be used to model AEDT performance
By following these guidelines, organizations can carry out rigorous bias audits of their automated hiring tools for compliance purposes.
Providing Required Notices
Employers and agencies must also notify all NYC-based candidates that an AEDT will be used to assess them:
Timing & Frequency Guidelines
- Initial notices must be sent 10+ business days before assessment takes place
- New notices are required if assessment methods change significantly
- Can be included in job postings, emails or paper notices to registered candidates
- For promotional roles, can be part of HR policies or handbooks
- A general website notice can cover multiple openings without individualized notices
Careful compliance with notice procedures ensures candidates can make informed decisions on whether to continue application processes.
Enforcement & Redress
While broader anti-discrimination statutes still apply, Local Law 144 itself will be enforced by the NYC Department of Consumer and Worker Protection (DCWP). This agency is authorized to issue financial penalties for violations.
If candidates or employees believe an AEDT’s results are discriminatory, they can file claims directly with the NYC Commission on Human Rights to investigate under pre-existing laws.
To report suspected violations of Local Law 144 itself, candidates can contact DCWP through the following channels:
Filing a Complaint
- Via phone at 311
- Electronically through the DCWP website
- Must include details on the position, name/type of AEDT used, provided notices and an explanation of which requirements were potentially violated
The new law empowers job seekers with recourse in situations of noncompliance or audits indicating bias. At the same time, it standardizes oversight procedures through city agencies.
Without question, Local Law 144 brings wide-ranging implications for talent acquisition workflows and technology budgets in New York City. Compliance requires added costs, longer hiring cycles and major operational changes.
At first, talent acquisition teams may find themselves managing lots of new paperwork to provide individualized notices. Meanwhile, organizations must budget for comprehensive bias audits across all algorithmic systems. The certification process could delay time-to-fill metrics as well.
Yet over time, the law provides a framework for equitable and ethical AI usage standards. As leaders develop comprehensive action plans, important next steps involve cataloging current tech stacks, estimating audit costs and revamping talent systems where needed.
While adaptation poses challenges, the NYC tech community is no stranger to disruption. Compliance costs may pare down smaller players, but established firms have excelled at innovating through industry shifts. And by rising to meet higher standards for candidate rights, the market as a whole can accelerate progress.
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