The city will regulate the use of artificial intelligence in hiring

November 15, 2022

Robot regulation. New York City regulates everything from gas line and facade inspections to building carbon emissions. Now it will regulate robots. Effective January 1, 2023, the city will prohibit employers and placement agencies from using certain artificial intelligence (“IA”) screening tools in the hiring or promotion process until the tools have been “bias checking”. While little co-op or condominium boards themselves may be currently using AI in their hiring process, this is a growing trend and likely to be used by their suppliers, such as management companies, contractors, law firms and accounting firms. As such, this is something that boards need to be aware of.

Getting rid of the human element. Local Law 144 governs Automated employment decision tools, or AEDTS, which include “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that emits a simplified output, including a score, classification or recommendation, which is used to substantially assist or replace discretionary decision-making for… employment decisions. Simply put, this applies to AI modeling or data processing used to select or assess job applicants based on a score, rating, or ranking. Examples include resume scanners that prioritize applications using certain keywords, chatbots that query candidates on their qualifications and reject those who do not meet predefined requirements, and testing software that provides job fit scores for candidates based on their personality, their abilities or cognitive skills. skills.

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The bias audit requirement. Employers and placement agencies will be prohibited from using the AEDTS unless two criteria are met. First, the AEDT must be “biased” within one year of being used. Then, prior to using the AEDT, a summary of the bias audit and the date of distribution must be posted on the employer’s or employment agency’s website. Any such audit must be carried out by an independent auditor (a person or entity not involved in the use of the AEDT).

There are two types of bias audits. When an AEDT selects individuals to advance in the hiring process or classifies them into groups, the bias audit must calculate the selection rate for each category and calculate the impact ratio for each category. The categories are race, ethnicity and gender. When the AEDT only scores individuals, the bias audit should calculate the average score of individuals in each category and the impact ratio for each category.

The bias audit must then be posted on the employer’s or employment agency’s website, and it must remain posted for at least six months after the last use of the AEDT.

Give notice. Any employer or placement agency that uses an AEDT must inform applicants who reside in New York that an AEDT will be used and the qualifications and job characteristics that are being considered. Notice must be provided at least 10 business days prior to using the AEDT. It must also include instructions on how to request an alternative selection process or accommodation.

If the notice is not on a website, it must be provided within 30 days of a written request from the applicant. The employer or employment agency should provide instructions on how to make a written request if the information is not posted on the website.

Penalties for non-compliance. An employer or employment agency that does not comply with this new law is liable to financial penalties: up to $500 for the first offense and each additional offense occurring on the same day as the first offense. Each subsequent violation will cost the employer between $500 and $1,500.

Each day an AEDT is used in violation of the law will result in a separate violation. Any failure to provide notice to a candidate of the use of an AEDT is a separate violation with a separate monetary penalty.

Andrew I. Bart is a lawyer at the law firm Borah Goldstein Altschuler Nahins & Goidel.