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August 29, 2022

New York Restricts Automated Decision Making in Employment

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Key Takeaways

  • Failure to comply can result in penalties of $500 per violation for the first infraction and up to $1,500 per subsequent infraction.

Businesses operating in New York City should be aware of a local law addressing the use of automated employment screening and decision-making tools coming into effect on January 1, 2023.  This law applies broadly to employers and employment agencies operating in New York City that target New York City residents using what it refers to as Automated Employment Decision Tools.

Generally, this law prohibits employers from using Automated Employment Decision Tools to screen candidates or employees for employment decisions unless: (1) the tool has been subject to a bias audit conducted no more than one year prior to the use of such tool; and (2) a summary of the results of the bias audit, as well as the distribution date of the tool at issue, have been made publicly available on the website of the employer prior to using the tool. A "bias audit" is defined as "an impartial evaluation by an independent auditor," which includes "the testing of an automated employment decision tool to assess the tool's disparate impact on persons of any component 1 category required to be reported by employers pursuant to" 42 U.S.C. § 2000e-8(c) and 29 C.F.R. § 1602.7.  The law does not, however, define "independent auditor." 

Additionally, employers or agencies that use an automated employment decision tool to screen candidates or employees must notify each individual (1) that an automated employment decision tool will be used in connection with the assessment at least 10 business days before use of the tool, and allow the candidate to request an alternative selection method; (2) of the characteristics or other metrics the tool will use to assess the candidate / employee, and (3) of the types of information collected by the tool, the sources of the data, and information regarding the employer's data retention policy.

The bias audit required under this law must be an impartial evaluation conducted by an independent auditor.  As most employers implementing automated employment screening tools rely on third party service providers, employers should begin coordinating now to ensure compliance come January 1, 2023.  Failure to comply can result in penalties of $500 per violation for the first infraction and up to $1,500 per subsequent infraction.

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