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.

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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.