On December 12, 2022, the New York City Department of Consumer and Worker Protection (“DCWP”) announced that it would delay the date of its enforcement of the New York City Automated Employment Decision Tools Law (“AEDTL”) from January 1, 2023 to April 15, 2023. The change is due to the high volume of public comments the DCWP received in connection with its proposed regulations implementing the AEDTL, along with the DCWP’s plans to hold a second public hearing before finalizing those regulations.
By way of background, the AEDTL restricts employers’ ability to use “automated employment decision tools” in hiring and promotion decisions within New York City. The AEDTL defines “automated employment decision tool” 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 making employment decisions that impact natural persons.” The term does not encompass “a tool that does not automate, support, substantially assist or replace discretionary decision-making process and that does not materially impact natural persons,” such as junk email filters, databases, or spreadsheets.
Employers are prohibited from using automated employment decision tools in connection with hiring and promotion decisions within New York City unless: (i) the tool has been the subject of a bias audit conducted within the previous year; and (ii) the employer has published a summary of the results of the tool’s most recent bias audit, as well as the distribution date of the tool to which such audit applies, on its publicly-available website. A “bias audit” is defined as an “impartial evaluation by an independent auditor” that must test whether application of the tool’s criteria results in a disparate impact based on sex, race, or ethnicity.
The AEDTL also imposes significant notice requirements. Employers who use automated employment decision tools in employment decisions must disclose the following information at least ten business days before the tool is used: (i) the fact that an automated employment decision tool will be used in connection with the assessment or evaluation of any candidate who lives in New York City; and (ii) the job qualifications and characteristics that the automated employment decision tool will use in assessing the candidate. Employers must also provide the following information within thirty days of a written request: (i) the type of data collected for the automated employment decision tool; (ii) the source of the data; and (iii) the employer’s data retention policy. Finally, employers must advise candidates or employees with information on how to request an alternative selection process or accommodation.
The consequences for violating the AEDTL can be steep. Employers who violate the AEDTL may be subject to civil fines of $500 for a first violation (and each additional violation occurring on the same day as the first violation), and $500 – $1,500 for subsequent violations. Each day on which an automated employment decision tool is used in violation of the law will give rise to a separate violation, as will any failure to provide notice required under the AEDTL. The AEDTL neither expressly permits nor prohibits a private right of action, but states that it shall not be construed to “limit any right of any candidate or employee for an employment decision to bring a civil action in any court of competent jurisdiction.”
On September 23, 2022, the DCWP posted a set of proposed regulations implementing the AEDTL, and held a public hearing regarding them on November 4, 2022. The public hearing attracted hundreds of attendees, and the DCWP received a high volume of comments requesting clarification regarding the AEDTL and the regulations that DCWP proposed. To provide sufficient time to process those comments, hold a second public hearing, and presumably issue new regulations, the DCWP will delay any enforcement measures for the AEDTL until April 15, 2023.
Although this news may come as a relief for employers who use automated employment decision tools, New York employers should continue to consider the AEDTL’s requirements (including the terms of any future final regulations) and plan for compliance. We will continue to monitor any new developments and provide updates as they become available.