New York City’s new AI-in-hiring law took effect July 5, and companies using artificial intelligence to hire or promote workers in the city must now submit the algorithms they use for an independent audit and make the results public. New York City Local Law 144 also requires companies using AI in hiring to disclose to candidates the algorithms they are using as well an “average score” that candidates of different races, ethnicities and genders are likely to receive from the algorithms.

Two business days before the start of enforcement of the law regulating the use of automated employment decision tools (AEDTs), the New York City Department of Consumer and Worker Protection released a new set of set of frequently asked questions. The FAQs comprise seven sections covering questions on an overview of the law, general bias audit requirements, data requirements, independent auditors, responsibility for bias audits, notice requirements and complaints.

These FAQs follow the codification of the law in December 2021 and several subsequent steps through which the DCWP materially refined the interpretation of the law. The most recent FAQs yield one valuable clarification and one significant new concern, according to a JD Supra blog post by law firm Littler.

Use in Scanning Résumés

In FAQ I.6, the department clarifies that the use of an AEDT to fill a particular position is within scope only when the AEDT is applied to those who have submitted an application for that position.

I.6. Do the law’s requirements apply if an employer or employment agency uses an AEDT to scan a résumé bank, conduct outreach to potential candidates or invite applications?

No. The requirements apply to AEDT use to assess candidates for hiring or promotion only. A candidate for employment is a person who has applied for a specific position by submitting the necessary information or items in the format required by the employer or employment agency.

If AEDT use is to assess someone who is not an employee being considered for promotion and who has not applied for a specific position for employment, the bias audit and notice requirements do not apply.

“This answer establishes that using an AEDT to search through an existing database of nonemployee résumés or other collection of potential-applicant data, and/or merely encouraging those identified as prime candidates to apply for the position at hand, does not activate the requirements of the law,” the Littler post states.

Geographic Scope

Meanwhile, FAQ I.4 muddies the requirements for employment firms, according to Littler. Specifically:

I.4. What are the law’s requirements, and how do they apply to an AEDT used “in the city”?

The law applies only to employers and employment agencies that use an AEDT “in the city.” This means:

  • The job location is an office in NYC, at least part time. OR
  • The job is fully remote, but the location associated with it is an office in NYC. OR
  • The location of the employment agency using the AEDT is NYC, or if the location of the employment agency is outside NYC, one of the bullets above is true.

If the law applies:

  • A bias audit of the AEDT must be completed before its use, AND
  • Job candidates who are New York City residents must receive notice that the employer or employment agency uses an AEDT.

According to Littler, the geographic analysis is simple for employers, consistent with prior interpretations of the law and regulations, and driven by the location of the job, not that of the employer. If the job is performed at an office or other corporate location outside NYC, the law does not apply. If the job is performed at an assigned corporate location in NYC (even in a partial or hybrid manner), then the law applies. And if the job is performed 100% outside corporate work locations (e.g., in work-from-home setups), then the law does not apply unless the person is attached to an NYC location of the employer.

This division of geographic scope could just as easily apply to employment agencies. However, the third bullet point could suggest that the law applies to all jobs — including jobs performed fully outside NYC — if the hiring is done by an employment agency located in New York City.

New York City is not the only jurisdiction looking to regulate AI tools in their recruitment processes; contingent workforce program managers should keep up to date on the latest imposed and in-progress regulations on AI. A 2022 report by SIA, Using AI: Risks and Challenges, highlighted that globally, national and local governments have begun to adopt strategies and issue guidelines for the ethical use of AI, noting that these will soon be followed by legislation, with the EU and China leading the way.

In addition, SIA’s Associate Editor Danny Romero earlier this year discussed recent regulatory and policy actions being taken by governments and organizations worldwide on AI and AI discrimination bias in a two-part CWS 3.0 article.