New York City Moves to Restrict Use of Certain Automated Hiring Technologies

Technology could help simplify the hiring process, including adopting new technologies to manage your candidate pool, run video interviews, and conduct background checks. Employers may use automation to process candidates and hire faster. A New York City law will soon place restrictions on the use of certain automation tools during the hiring process.

Restrictions on Certain HR Technology Tools

The New York City council enacted the new law on December 11, 2021. The law goes into effect on January 23, 2022. Once effective, employers and employment agencies (“employers”) cannot use “automated employment decision tools” unless they meet certain conditions. An automated employment decision tool includes any computational process, with some exceptions, that issues simplified output, including a score, classification, or recommendation to assist or replace discretionary decision making for employment decisions through:

  • Machine learning
  • Statistical modeling
  • Data analytics
  • Artificial intelligence

The city seeks to remove situations where these technologies may create bias in hiring.

Criteria for Using Automated Employment Decision Tools

Automated tools that assist employers with decision-making during the hiring process won’t be banned entirely in New York City. The city will allow employers to use automated employment decision tools after they meet certain requirements. This includes:

1. Conducting a bias audit of the automated employment decision tool. This must be an impartial evaluation by an independent auditor. The bias audit must be done within the year before using the tool.

2. Bias audit results must be available to the public. A summary of the results of the most recent bias audit and the distribution date of the tool to which the audit applies, must be publicly available on the employer’s website before using the tool.

Notice Required for NYC Candidates

In New York City, employers that use an automated employment decision tool to screen a candidate or employee must provide certain notices to employees or candidates that reside in the city, including:

  • The employer’s plan to use an automated employment decision tool during the candidate assessment. This notice must be made no less than ten (10) business days before use of the tool and must allow the candidate to request an alternative selection process or accommodation.
  • The job qualifications and characteristics the tool will use in the assessment of the candidate or employee. This notice must be made no less than ten (10) business days before using the tool.
  • If not disclosed on the employer’s website, the candidate’s right to submit a written request for the type of data collected for the tool, data source, and employer’s data retention policy. The employer must provide the information within 30 days of the candidate’s written request unless disclosing this information would violate local, state, or federal law or interfere with a law enforcement investigation.

Employers that violate the restrictions could face civil penalties. The first violation and any additional violations made on that same day will result in a $500 civil penalty. Later violations require a fine of $500-$1,500 for each subsequent offense. The law notes that each day an employer uses an automated employment decision tool is a separate violation. Failing to provide any notice to a candidate or employee is also a separate violation. Additionally, New York City’s corporation counsel, or other persons designated by the corporation counsel, may initiate court proceedings to correct violations, including mandating compliance with the law or other appropriate relief.

If you hire candidates that reside in New York City, you may want to become familiar with this law before the effective date. Employers should review the law with their legal counsel to understand the impact on the hiring process.

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