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NYC Local Law 144
NYC Local Law 144 - What You Need to Know
June 1, 2023
NYC Local Law 144
This post seeks to succinctly present all of the things you need to know about NYC Local Law 144. Here is the actual law for reference.
What is it?
A new law aimed at identifying and communicating bias in AI-powered HR software. The law classifies hiring software that uses AI to substantially assist or replace human decision-making as an 'Automated Employment Decision Tool' or an 'AEDT.' Enforcement of the law starts on July 5th, 2023.
Who is impacted?
Companies that hire in NYC and have an office (not necessarily the main office or headquarters) in NYC and use one or more AEDTs as part of their hiring process are subject to NYC Local Law 144. In order to comply with the law, these companies need to:
- Have an independent bias audit conducted for each AEDT they use
- Post a link to the audit results on their website
- Provide notice to candidates and employees of their AEDT usage
It is important to note that the onus of compliance is on the companies using AEDTs instead of the AEDT vendors themselves. However, AEDT vendors typically need to be involved to provide the data required for the bias audit.
How do I know if we're using an AEDT?
As a rule of thumb, HR tools that help you automatically screen candidates, assign some simplified score to a candidate (e.g. 'this candidate is a 92% match', 'this candidate is 4.4 stars'), or perform an automated assessment such as a coding test all have a likelihood of being an AEDT.
What does a bias audit look like?
A bias audit compares either the 'selection rate' or 'scoring rate' of candidates across sex and race. Selection rate measures the percentage of candidates assessed by an AEDT who are selected to move forward in the hiring process or are classified as a 'YES' by the AEDT. Scoring rate measures the percentage of candidates who score above the median score assigned by an AEDT. It is up to the auditor to decide whether to use selection rate or scoring rate for the audit, this typically depends on the nature of the AEDT and what type of data is available for the audit.
Here is an example bias audit.
The law does not define criteria for what constitutes a 'passing' bias audit. All that is required is that a company has a bias audit conducted and publishes the results. As far as NYC Local Law 144 is concerned, there is no such thing as a failed audit.
If insufficient data is available or an AEDT does not have data on candidate sex and race, the audit is to be conducted with 'test data.' The law doesn't specify the methodology for generating test data, it simply dictates that the audit report makes it clear that test data was used and specifies how it was generated.
What is the penalty for non-compliance?
Fines are set at up to $1,500 a day per violation. This means that if a company uses 3 AEDTs without published audits, it is liable to be fined up to $4,500 a day until it complies with the law.
Additionally, non-compliance comes with an increased risk of discriminatory hiring lawsuits.
How do I get an audit?
ConductorAI provides a complete compliance solution. We can help you determine if you are using an AEDT, conduct a bias audit, host the results, and give you guidance on how to ensure you're 100% compliant with NYC Local Law 144 in time for the July 5th deadline.
See our NYC Local Law 144 page for more info.