December 2022

State Updates

 

New York City limits use of automated tools in employment decisions (Updated)

09/01/22

Author: ADP Admin/Tuesday, August 30, 2022/Categories: Compliance Corner , State Compliance Update, New York

 

Updated: The city has issuedguidancethat contains theschedule of penaltiesemployers may face if found in violation of the law, and lists circumstances under which a separate, daily violation would occur:

· An employer’s failure to provide notice to a candidate or employee as required by law.

· Each day an employer uses an automated employment decision tool in violation of the law.

 

 

New York City has enacted legislation (Int. No. 1894-A) that amends the New York City Human Rights Law and regulates the use of automated tools in certain employment decisions. The law takes effect on Jan. 1, 2023.

The details:

The legislation regulates New York City employers and employment agencies' use of artificial intelligence, data analytics, machine learning, or statistical modeling (automated employment decision tools) that are used to substantially assist or replace discretionary decision-making for employment decisions.

The law generally applies to computerized tools or software programs based on algorithms to identify, select, evaluate or recruit candidates, such as:

  • Recruiting tools that review resumes, chat with or rank applicants, or conduct behavioral analysis of candidates; and
  • Tools used to assess workers' skills, performance and productivity, or monitor field-based or remote employees.

Note: The law does not include a tool that does not automate, support, substantially assist or replace discretionary decision-making processes and that does not materially impact people, including, but not limited to, a junk email filter, firewall, antivirus software, calculator, spreadsheet, database, data set, or other compilation of data. The law is also silent on tools that identify employees for termination or reductions in force.

Notice requirement:

Under the law, employers must notify a New York City resident that applied for a position (at least 10 business days before using the tool) if their application will be subject to an automated tool as part of the decision-making process and what specific job qualifications and characteristics the tool will use to assess workers and candidates. The notice must also inform candidates of their right to request an alternative selection process or accommodation.

Using an automated employment decision tool:

To use an automated employment decision tool, covered employers must retain an independent auditor to assess whether the tool's selection criteria result in disparate impact based on race, ethnicity, or sex on an annual basis. They must also publish a summary of the results and the distribution date of the tool on their website.

The law also requires covered employers to retain information about the source and type of data collected for the tool and the businesses' data retention policy. Employers must disclose this information on their website or provide it to an applicant within 30 days of a written request, unless prohibited by law.

Penalties:

Employers that fail to comply may face fines. See the schedule of penalties for further details.

Next steps:

If considering the use of automated employment decision tools, New York City employers should:

  • Create a process for conducting independent audits as required by law;
  • Comply with the notice requirements above and consider issuing the required notice to all applicants for New York City openings and promotions to help minimize issues with capturing NYC residency;
  • Allow for employees and candidates to opt-out of the automated employment tool process; and
  • Update data-retention policies to ensure compliance with the law.

Covered employers should also anticipate further regulations from the city that clarify their obligations under the law.

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