New York Regulates the Use of AI-Driven Hiring
By: Brenna Harman
New York City published final regulations regarding the use of AI-driven hiring tools, and enforcement of the laws went into effect on July 5, 2023.[1] Local Law 144 (“NYC 144”) requires any automated employment decision tool (AEDT) to be audited annually.[2] The audits are performed to check for bias that may be intentionally or unintentionally within the systems.[3] The employer must determine if they are using an AEDT, perform the audit, publish a public summary of the audit, and provide certain notices to applicants or employees who are subject to screening by the tool.[4]
What is an AEDT?
An automated employment decision tool can be used to facilitate the hiring process.[5] It filters through resumes and removes unintended bias.[6] Then, the hiring managers receive candidates based on skills and experience, not based on educational or geographical background.[7] However, without some sort of audit, AI can perpetrate unintended biases.[8] In fact, AI systems that analyze facial expressions and body language favor white, male, and abled-bodied candidates.[9] On the other hand, AI cannot be used to hire candidates “based exclusively on a protected class” because it would still be providing one pool of candidates “an unlawful advantage over the rest.”[10]
Is an employer using an AEDT?
An AEDT can be identified by looking at the technology of the tool, how the tool is used, and what purposes the tool is used for.[11] Under the New York statute, an AEDT is defined 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 employment decisions that impact natural persons.”[12]
Employers should ask themselves: (1) does the technology fall within the AEDT definition? (2) is the tool being used in a way that classifies it as an AEDT? and (3) is the tool making a covered employment decision within the definition of AEDT and NYC 144?[13]
Application of NYC 144
When a tool meets all three criteria and falls within the scope of NYC 144, employers must (1) commission an audit from a third party, (2) publish the results of the audit, (3) provide notice to applicants and employees of the tool’s use, and (4) provide notice to individuals subject to the AEDT.[14]
A third party, independent auditor is an individual or group who has not been involved in the use, development, or distribution of the AEDT.[15] They must not have any financial interest or material indirect financial interest in the use of the AEDT.[16] The audit itself consists of the selection rate and impact ratio for each category.[17] Some categories include sex, race or ethnicity, and other intersectional categories.[18] That information is then required to be posted clearly and conspicuously on the employment section of the website.[19] Finally, NYC 144 requires that employers offer an alternative selection process (ASP) or reasonable accommodation to individuals who request it.[20]
Purposes of the Law
Proponents of the law say this is the beginning of a positive trend towards regulating AI and mitigating the risks of its use.[21] Even if the law itself is not perfect, it is the start of requiring companies to better understand the algorithms and technology they use.[22]
Those in opposition to the law are divided into two main categories — businesses and public interest groups.[23] Businesses argue that that it is impractical and burdensome to comply with. While public interest groups say it isn’t enforceable or extensive enough.[24] They assert that the law is “underinclusive,” meaning that it may leave many uses of AEDTs out.[25] Further, the law could provide a false sense of security around the idea of using AI for hiring.[26]
Conclusion
Regardless of whether a company has offices in New York City, these laws are becoming more and more common.[27] With the rise in remote work, there is an increasing possibility that New York City candidates could apply to non-local organizations.[28] AI is being employed in the workforce and regulations are beginning to be put in place as an attempt to ensure an equitable hiring process.[29]
[1] Jim Paretti et al., New York City Adopts Final Regulations on Use of AI in Hiring and Promotion, Extends Enforcement Date to July 5, 2023, Littler (Apr. 13, 2023), https://www.littler.com/publication-press/publication/new-york-city-adopts-final-regulations-use-ai-hiring-and-promotion.
[2] Id.
[3] Jonathan Kestenbaum, NYC’s New AI Bias Law Broadly Impacts Hiring and Requires Audits, Bloomberg Law (July 5, 2023, 5:00 AM), https://news.bloomberglaw.com/us-law-week/nycs-new-ai-bias-law-broadly-impacts-hiring-and-requires-audits.
[4] Paretti, supra note 1.
[5] Kestenbaum, supra note 3.
[6] Id.
[7] Id.
[8] Id.
[9] Tate Ryan-Mosley, Why Everyone is Mad About New York’s AI Hiring Law, MIT Tech. Rev. (July 10, 2023), https://www.technologyreview.com/2023/07/10/1076013/new-york-ai-hiring-law/; See Angela Chen, The AI Hiring Industry is Under Scrutiny — But It’ll Be hard to Fix, MIT Tech. Rev. (Nov. 7, 2019), https://www.technologyreview.com/2019/11/07/75194/hirevue-ai-automated-hiring-discrimination-ftc-epic-bias/.
[10] Kestenbaum, supra note 3.
[11] Paretti, supra note 1.
[12] N.Y. Comp. Codes R. & Regs. tit. 20, § 20-871 (2023).
[13] Paretti, supra note 1.
[14] Id.
[15] Id.
[16] Id.
[17] Id.
[18] Paretti, supra note 1.
[19] Id.
[20] Id.
[21] Ryan-Mosley, supra note 9.
[22] Id.
[23] Id.
[24] Id. (referring to groups like the Center for Democracy & Technology, the Surveillance Technology Oversight Project, the NAACP Legal Defense and Educational Fund, and more).
[25] Id.
[26] Ryan-Mosley, supra note 9.
[27] Kestenbaum, supra note 3.
[28] Id.
[29] See Id.
Image Source: https://fortune.com/2023/03/13/artificial-intelligence-make-workplace-decisions-human-intelligence-remains-vital-careers-tech-gary-friedman/