New York City Law Restricting Use Of AI Takes Effect in January

The New York City Council has recently enacted an ordinance banning artificial intelligence (“AI”) in employment decisions unless the technology has been subject to an independent bias audit within a year of use.

Many employers have been using AI in employment decisions for years without regulation.  This technology can range from algorithms finding ideal candidates to software used to asses a candidate’s performance during screening interviews. While AI tools promote efficiency, reduce costs, and can help employers make informed decisions, technology can run afoul of discrimination laws by reinforcing bias or screening out candidates of protected classes.

The law, which takes effect on January 1, 2023, bans such unregulated practices in New York City by requiring employers to obtain an independent audit of their automated tools within a year of use. Employers will be required to make the results of the audit publicly available on their websites.

Additionally, employers must notify candidates who reside in New York City within 10 days of using automated tools and detail the job qualifications and characteristics that the tool will use to assess the candidate. Employers that do not comply will be subject to a $500 fine for the first violation, and a $1,500 fine for each subsequent violation. The penalty will then be multiplied by each day that the issue is unresolved.  These penalties can add up quickly, making it crucial for employers to review their automated employment tools before the law takes effect.