Artificial Intelligence (AI)-powered hiring and promotional tools have had a free run up until now. But on July 5, 2023, New York City upped the ante, introducing Local Law 144. This legislation places restrictions on employers using AI-driven employment tools.
Unpacking Local Law 144: A Spotlight on AI Employment Tools
Local Law 144 throws a challenge at employers using automated employment decision tools (AEDTs). These AI-powered tools have a broad spectrum of functionalities, including screening resumes for qualifications and scoring candidates based on video interview performance.
As per the new law, an employer can only use an AEDT if it has been audited for bias within the past year. This means employers must now independently audit their AEDTs for bias, and share the findings on their company websites. Non-compliance invites fines—$500 for the first offense, and $1,500 for each one thereafter.
Moreover, Local Law 144 mandates that employers notify candidates about the use of an AEDT and allow them the option to opt out.
Echoes Around the Globe: Local Law 144 as a Blueprint?
Local Law 144 isn’t isolated in its approach. It’s part of a global drive to regulate AI use and could inspire similar auditing rules in other jurisdictions. However, it doesn’t specify a legal benchmark for considering an AI-based hiring or recruiting tool as biased or having a disparate impact on protected groups.
The Equal Employment Opportunity Commission (EEOC) has expressed its intention to closely examine AEDTs. They suggest a rule of thumb—bias is likely if a hiring test has a selection rate of less than 80% for a protected group compared to others.
The AI Legislation Landscape: What’s Happening Elsewhere?
While New York City takes the lead, other states and jurisdictions are following suit with their AI-based legislation. In 2020, Illinois passed the Artificial Intelligence Video Interview Act, 820 ILCS 42. Maryland has a law in place that restricts the use of facial recognition technology during job interviews.
States such as Alabama, Colorado, Illinois, Maryland, Vermont, and Washington have set up councils to supervise AI and its regulations. Moreover, legislation to establish similar bodies is underway in numerous other states.
The Road Ahead: Preparing for an AI-Regulated Future
Since 2018, states have been implementing legislation related to artificial intelligence, anticipating the strides technology will make. Local Law 144 stands out as the most comprehensive regulation so far, specifically dealing with the use of AI and machine learning applications in HR.
Employers using automated decision-making for hiring and promotions should evaluate whether modifications are needed to eliminate bias in their tools. As AI continues to gain attention through applications like ChatGPT, it’s clear that more jurisdictions will quickly follow in the footsteps of New York City.
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