NYC Local Law 144

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Section 1 - Description

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Section 2 - Scope

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Section 3 - Requirements

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Section 4 - Penalties

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Section 5 - Status

Section 1

Description:

NYC Local Law 144 prohibits employers from using automated employment decision tools (AEDTs) without having an independent auditor assess the AEDT for bias, conducted in the last 12 months. Employers must notify candidates that they use an AEDT, which qualifications the AEDT assesses, the types and sources of data the business collects for the AEDT, and its data retention policy, and must provide the candidates with an opportunity to request an alternative selection process or accommodation, if available.

Section 2

Scope:

The Law covers any employer using AEDTs on applicants or employees residing in NYC.
Currently an AEDT is defined as a tool that provides a simplified output (say, a model score) to be used as the only or most significant criterion in a selection process, or to be used as an override to a human decision.

Section 3

Requirements:

The requirements are composed of three main parts:

  • Independent audit: Employers must have an independent 3rd party audit the tool for bias audit. These audits must be completed annually.

    This audit is based on the AEDT’s differential impact on different demographic groups, specifically on gender and race/ethnicity, and for all the possible intersections of the two – e.g. “Hispanic women”, “Asian men”.  For AEDTs that make a binary pass/fail decision, the audit must assess the selection rate of the each categories, defined as the number of candidates passed divided by the number of candidates total, within that group. For AEDTs with continuous score outputs, the audit must use scoring rate, which is calculated similar to selection rate and describes how many candidates received a score greater than the median score (the median across the entire set of candidates).
    The audit must then calculate impact ratio, or the ratio between the selection (or scoring) rate between each group and the group with the highest selection (or scoring) rate. In the spirit of the four-fifths rule, impact ratios of less than 80% could potentially signal bias against the affected group. While the bill does not explicitly prohibit employers from using an AEDT that break the four-fifths rule, discrimination in hiring is illegal per federal, state and NYC law.

  • Notice to candidates: Employers must also give candidates due notice of at least 10 business days before any usage of AEDTs with an option to request an alternative assessment method, if reasonable.
  • Results visibility: Employers must also publish the date and the results of the most recent AEDT audits.

Regarding small sample sizes for the assessed categories, the law permits auditors to exclude categories composing less than 2% of the data from the bias analysis.

Section 4

Penalties:

Penalties for non-compliance are a $500 fine for the first violation and $1,500 fines for subsequent violations.

Section 5

Status:

The bill has been passed and enforcement started on July 5, 2023. Companies based in NYC or evaluating applicants in the City must comply with the law.