The New York City Council recently enacted an ordinance banning artificial intelligence (“AI”) in employment decisions unless the technology has been subject to an independent bias audit within a year of use.

Many employers have been using AI in employment decisions for years without regulation. This technology can range from algorithms finding ideal candidates to software used to asses a candidate’s performance during screening interviews. While AI tools promote efficiency, reduce costs, and can help employers make informed decisions, technology can run afoul of discrimination laws by reinforcing bias or screening out candidates of protected classes.

The law, which takes effect on January 1, 2023, bans such unregulated practices in New York City by requiring employers to obtain an independent audit of their automated tools within a year of use. Employers will be required to make the results of the audit publicly available on their websites.

Additionally, employers must notify candidates who reside in New York City within 10 days of using automated tools and detail the job qualifications and characteristics that the tool will use to assess the candidate. Employers that do not comply will be subject to a $500 fine for the first violation, and a $1,500 fine for each subsequent violation. The penalty will then be multiplied by each day that the issue is unresolved.  These penalties can add up quickly, making it crucial for employers to review their automated employment tools before the law takes effect.

There are unanswered questions that the City needs to address for a smooth implementation of this law. The law does not specify the independent people or agencies qualified to perform a “bias audit,” although many larger employers have been validating similar types of pre-employment tools prior to use for years.

Although the City’s Office of the Corporation Counsel is authorized to bring a lawsuit to address violations of the new law, private lawsuits by aggrieved parties are not expressly permitted. The law is silent about whether class action lawsuits could be filed, it is likely that the new law would promote the filing of such lawsuits to the extent that the AI tools would be used in accordance with uniform policies and practices.

While NYC has not issued guidance at this time, it is likely that more direction will be issued before the law takes effect in January 2023. We will keep you informed of further developments.

For more information, contact Sal Gangemi.

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Photo of Salvatore G. Gangemi Salvatore G. Gangemi

Salvatore G. Gangemi is a Partner in the Litigation Department of Murtha Cullina and a member of the Labor and Employment Practice Group. He advises clients with respect to state, federal and local employment laws. In addition, he litigates matters involving misappropriation of…

Salvatore G. Gangemi is a Partner in the Litigation Department of Murtha Cullina and a member of the Labor and Employment Practice Group. He advises clients with respect to state, federal and local employment laws. In addition, he litigates matters involving misappropriation of trade secrets, restrictive covenants, breach of employment contract, fiduciary duty, and other work-related common law claims. Sal also counsels clients on day-to-day issues involving workplace management and administration, including requests for reasonable accommodation for disabilities, for family and medical leave, and wage and hour issues.  He conducts employment law training on a variety of topics, including sexual harassment prevention and wage/ hour compliance.  He also drafts employment policies and agreements, and assists clients in auditing worker classification practices and policies both in the context of the Fair Labor Standards Act and state laws governing independent contractor determinations.

Photo of Alyssa R. Ferreone Alyssa R. Ferreone

Alyssa Ferreone is an Associate in the Murtha Cullina Litigation Department.

Prior to joining Murtha Cullina, Alyssa was a Judicial Law Clerk for the Honorable Robert J. Devlin, Jr. and the Honorable Melanie L. Cradle at the Connecticut Appellate Court.

Alyssa earned her…

Alyssa Ferreone is an Associate in the Murtha Cullina Litigation Department.

Prior to joining Murtha Cullina, Alyssa was a Judicial Law Clerk for the Honorable Robert J. Devlin, Jr. and the Honorable Melanie L. Cradle at the Connecticut Appellate Court.

Alyssa earned her J.D. from Quinnipiac University School of Law, magna cum laude.  While in law school, Alyssa was a judicial intern for the Honorable Vanessa L. Bryant of the United States District Court for the District of Connecticut.  She served as the Supervising Note Editor on the Quinnipiac Health Law Journal and the Vice Magister of the Burns Inn Chapter of the Phi Delta Phi legal honor society. Alyssa was selected by the law school faculty to receive the Academic Excellence Award at commencement.

Alyssa earned her B.S. from Southeastern University where she named “Most Outstanding Graduate in the Legal Studies Major” at commencement.