NYC Local Law 144

New York City Local Law 144 (LL144) is a pioneering regulation designed to ensure fairness and transparency in hiring and promotion processes within New York City. It specifically targets the use of 'Automated Employment Decision Tools' (AEDTs), which are computational processes like machine learning or AI that produce simplified outputs (scores, classifications, recommendations) used to significantly assist or replace human decision-making in employment. The law aims to prevent and address potential biases in these tools, particularly concerning protected characteristics such as race, ethnicity, and sex.

This regulation applies to any employer or employment agency that uses an AEDT for employment decisions impacting individuals who are New York City residents or for positions located within New York City. It excludes basic tools that don't materially impact individuals or automate decision-making, such as spam filters or simple calculators. The core objective is to bring accountability to algorithmic hiring practices and empower job candidates and employees with information about how these tools affect their prospects.

A central requirement of LL144 is that employers and employment agencies must conduct an independent bias audit of any AEDT they use for hiring or promotion decisions. This audit must be performed by an impartial third-party auditor, free from conflicts of interest, and must occur at least once within one year of the AEDT's use. The purpose of the audit is to rigorously test the AEDT for any disparate impact on individuals based on their race, ethnicity, and sex, as defined by federal reporting categories.

The audit process typically involves analyzing selection or scoring rates across different demographic groups and calculating 'impact ratios' to identify if the tool disproportionately favors or disadvantages certain groups. While the law mandates the audit and transparency of its findings, it does not explicitly prohibit the use of an AEDT if bias is identified. Instead, it compels organizations to be aware of and transparent about any biases present in their algorithmic processes, encouraging them to address such findings in conjunction with broader anti-discrimination laws.

To ensure transparency, LL144 mandates that a summary of the most recent bias audit results for each AEDT must be made publicly available. This disclosure must be easily accessible on the employer's or employment agency's website, without any barriers to access, and must remain published for at least six months after the latest use of the AEDT. The summary needs to be comprehensive, including specific details such as the date the audit was conducted, the type of data used (e.g., historical or test data), the number of individuals assessed, and the selection or scoring rates broken down by demographic groups (race, ethnicity, and sex).

Crucially, the disclosure must also include the calculated impact ratios, which indicate the proportional difference in selection or scoring rates between groups. This public transparency aims to hold organizations accountable for the fairness of their automated tools and allows for public scrutiny of algorithmic employment practices. It empowers job seekers and the public to understand the potential biases identified in tools used for critical employment decisions.

LL144 imposes strict notification requirements on employers and employment agencies when using AEDTs. They must provide notice to any New York City resident candidate or employee who will be evaluated using an AEDT. This notice must be given at least ten business days before the tool is used in their assessment. The purpose of this advance notice is to inform individuals about the use of automated technology in their employment decision process.

The notification must clearly state that an AEDT will be used, explain the specific job qualifications or characteristics that the AEDT assesses, and provide clear instructions on how the individual can request an alternative assessment process. It must also inform them of their right to request a reasonable accommodation if needed. This provision ensures that individuals are aware of the algorithmic nature of their evaluation and have the opportunity to seek alternative methods or accommodations, thereby promoting fairness and informed consent in the hiring and promotion process.

The New York City Department of Consumer and Worker Protection (DCWP) is the primary authority responsible for the enforcement and oversight of Local Law 144. The DCWP is empowered to investigate companies, initiate audits, and request bias audit reports to ensure compliance with the law's provisions. This includes verifying that AEDTs have undergone the required independent bias audits, that results are publicly disclosed, and that proper notifications are provided to candidates and employees.

Beyond enforcement, the DCWP plays a crucial role in providing clarity and guidance to employers through interpretive rules and Frequently Asked Questions (FAQs). These resources help organizations understand their compliance obligations, covering aspects like the scope of AEDTs, data requirements for audits, and notification specifics. While the DCWP handles the procedural enforcement of LL144, any claims of discrimination arising from AEDT use are typically referred to the NYC Commission on Human Rights, which enforces the broader NYC Human Rights Law.

Non-compliance with New York City Local Law 144 can result in significant civil penalties enforced by the DCWP. For a first violation, an employer or employment agency faces a civil penalty of $500. Subsequent violations carry penalties ranging from $500 to $1,500. The law specifies that each day an AEDT is used in violation of the regulations constitutes a separate violation, and each instance of failing to provide the required notice to a candidate or employee also counts as a separate violation. This structure emphasizes continuous adherence to both the audit and notification requirements.

It's important to note that LL144 itself does not create a private right of action, meaning individuals cannot directly sue employers under this specific law. However, a failure to comply with LL144's provisions, such as neglecting bias audits or failing to address identified disparate impacts, could potentially be used as evidence to support claims of discrimination under existing federal, state, and New York City anti-discrimination laws (e.g., Title VII, NYC Human Rights Law). Beyond financial penalties, non-compliance can also lead to substantial reputational damage for organizations.

New York City Local Law 144 operates within a broader legal framework and does not supersede or replace existing federal, state, or other local anti-discrimination laws. Instead, it serves as a complementary regulation, adding specific requirements for transparency and bias mitigation when Automated Employment Decision Tools (AEDTs) are used. This means employers must ensure full compliance with LL144's bias audit and notification provisions while simultaneously adhering to their obligations under all other applicable anti-discrimination statutes, such as Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the New York City Human Rights Law.

For example, while LL144 specifically mandates bias audits for race, ethnicity, and sex, employers still have a responsibility under other laws to prevent discrimination based on other protected characteristics like age, disability, or religion. The DCWP enforces the procedural aspects of LL144, but claims of discrimination are handled by agencies like the EEOC or the NYC Commission on Human Rights. Therefore, compliance with LL144 is a necessary step but not a sufficient condition for overall legal compliance in employment practices involving AI.