In our previous post, we shared a comprehensive look at NYC Local Law 144 (NYC LL 144).  In this post we will cover everything you need to know as succinctly as possible.

What is NYC LL 144?

Passed in December 2021, NYC LL 144 aims to eliminate bias in the use of “automated employment decision tools” (AEDTs).  These tools typically use algorithms, artificial intelligence, or machine learning to help HR professionals sort through, prioritize, or decide steps in the employment process, from hiring to firing.

NYC Loca Law 144 goes into effect on January 1st, 2023, but enforcement has been postponed until July 5th, 2023. The law stipulates that employers using AEDTs in covered ways must have an independent, third-party audit performed on each of those tools and that the results of those audits need to be posted to a public website before they are used once the law is in effect.

Companies must also notify candidates that AEDTs are being used.

Fines go up to $1,500 per day, per “violation” — so a company with several unaudited tools could face a multiple of that penalty.

Who must comply with the law?

The law applies to all companies hiring employees in New York (who use certain tools) regardless of where the company is based. There are not currently exemptions for small businesses.

The tools covered by the law are those which automate some portion of the hiring or people management process. Typically, covered tools include:

  • Candidate sourcing tools and ATS that screen candidates in advance of being evaluated by a human
  • Assessments which provide a score or which provide a rank order of candidates
  • Tools that provide a “cultural fit” score
  • Certain interview tools that provide rank ordering or scores

While discussions of the law often involve AI and machine learning, many tools that are not strictly AI-driven will be covered by the current wording of the law.

What does the law require?

There are two core compliance requirements:

Companies must conduct an annual independent audit of tools covered by the law

  • The definition of independent audit is clear and quite restrictive: companies cannot rely on an audit provided by the tool vendor, and they cannot conduct the audit internally
  • The audit requires examination of the output of the hiring tool, with certain calculations made about the breakdown of candidate selection by gender, race, and the intersection of gender and race together
  • The results of the audit must be posted publicly; we post our audit results on a dedicated client microsite and provide a link back, which must be posted on the Jobs/Careers site
  • There is not a “pass/fail” definition in the New York law; companies comply if they conduct the proper audit and post the results

Companies must provide certain notification requirements regarding tools in use

  • Companies who use regulated tools must provide notice to candidates (both internal and external), typically in job descriptions or on a general Jobs website
  • Companies must disclose certain data collection, retention, and privacy information to applicants
  • Companies must notify candidates of an avenue to request an alternative screening process

How do I know if I am in compliance?

Take our quick Compliance Assessment quiz here; note that this quiz is not legal advice and does not certify your compliance.  You can also review the law as written here.

How do I become compliant?

Proceptual can help with the third party, independent ai audits, and the public posting of the results. We can also provide guidance on establishing any other notification processes needed.

In addition, Proceptual will provide contextual insights based on audit results so you can identify and address any areas of opportunity.

Our goal is to make the compliance process as simple and as valuable to your organization as possible.