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New York City Adopts Final Rules on Automated Employment Decision Tools

Client Updates / Apr 30, 2023

Written by Haim Ravia and Dotan Hammer

The New York City Department of Consumer and Worker Protection has adopted rules to implement the New York City law from 2021 regarding automated employment decision tools (“AEDT”). This first-of-its-kind municipal law prohibits private and public-sector employers and employment agencies in New York City from using an automated employment decision tool unless the tool has been subject to a bias audit within one year of its use. Organizations in New York City that use these tools must also make information about the bias-audit publicly available and provide certain disclosures to employees and job candidates.

Under the New York City law from 2021, AEDTs cover any computational process, such as machine learning, statistical modeling, data analytics, or artificial intelligence, that issues a simplified output like a score, classification, or recommendation, which the organization then uses to substantially assist or replace discretionary decision making for employment decisions, including new hirings and promotion of existing employees.

Enforcement of the new rules will begin on July 5, 2023, by which time organizations using AEDTs must complete a bias audit by an independent third party. The audit must calculate the selection rate for each race/ethnicity and sex category that is required to be reported to the U.S. Equal Employment Opportunity Commission. These selection rates must then be compared to the most selected category to determine an impact ratio.

Multiple employers using the same AEDT may rely on the same bias audit so long as they provide historical data, if available, for the independent auditor to consider in the bias audit. Importantly, the rules provide that an AEDT may not be used if its most recent bias audit is more than a year old.

Click here to read the final rules adopted by New York City regarding automated employment decision tools.