On April 6, 2023, the New York City Department of Consumer and Worker Protection (“DCWP”) issued a Final Rule to provide guidance regarding the City’s Automated Employment Decision Tool (“AEDT”) Law, which we covered in more detail here. The Final Rule generally clarifies employer obligations under the AEDT Law, which will be enforced beginning July 5, 2023. Here are the most notable provisions of the Final Rule:

Defining AEDT

The Final Rule defines an AEDT as any tool that applies artificial intelligence to “substantially assist or replace discretionary decision making” of an employer, such that it does any of the following:

  • Scores, classifies or ranks job applicants or employees based on only one factor,
  • Gives more weight to a simplified output as one set of criteria or
  • Uses a simplified output to overrule conclusions derived from human decision-making or other factors.

Guidance Regarding Conducting a “Bias Audit”

An employer cannot use an AEDT unless the tool was subject to a bias audit in the past year to ensure that the tool does not disparately impact a particular group. A bias audit must, at a minimum:

  • Calculate the selection rate for each category
  • Calculate the impact ratio for each category
    • The Final Rule provides that the impact ratio is either “(1) the selection rate for a category divided by the selection rate of the most selected category or (2) the scoring rate for a category divided by the scoring rate for the highest scoring category.”
  • Ensure that the calculations above separately calculate the impact of the AEDT on gender, race, and intersectional categories of sex, ethnicity and race.
  • Ensure that the calculations above are performed for each group and
  • Indicate the number of individuals the AEDT assessed that are not included in the required calculations because they fall into an unknown category.

Defining “Independent Auditor”

The Final Rule defines independent auditor as “a person or group that is capable of exercising objective and impartial judgment on all issues within the scope of a bias audit of an AEDT.” An auditor is not independent if the auditor:

  • was involved in using, developing or distributing the AEDT,
  • has or had an employment relationship with the employer using the AEDT or the vendor developing or distributing the AEDT , or
  • has or had any financial interest in an employer using the AEDT or the vendor developing or distributing the AEDT. 

Guidance Regarding Compliance with Notice Requirements

The notice requirement of the AEDT Law requires employers to inform applicants and employees of the use of AEDT and the process for requesting an alternative selection process or reasonable accommodation. Importantly, the Final Rule specifies that employers are not required to provide an alternative selection process, just that employees may request one.

To comply with the notice provisions of the AEDT Law, an employer may provide notice by doing any of the following within 10 business days before using the AEDT:

  • Posting notice on the employment section of its website
  • Posting notice in the job advertisement or
  • Mailing notice to applicants and employees.

New York City employers should review their automated tools that may fall under the AEDT Law and consult counsel to discuss compliance. The Labor and Employment attorneys at Murtha Cullina will continue monitoring this legislation and remain available to advise on these and other employment related issues.