New York City, NY: AI in Hiring and Promotion Final Regulations Adopted


All Employers with New York City Employees


July 5, 2023



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Quick Look

  • New York City has published its final regulations for the use of AI tools in hiring and promotion decisions.
  • Requirements include an annual bias audit and employee/applicant notices, among other employee rights.
  • Employers have until July 5, 2023 to comply with the requirements, if applicable, before enforcement of the law begins.


The long-awaited final regulations for the ordinance regulating the use of AI hiring tools have finally been published. Local Law 144 requires employers and employment agencies that use automated employment decision tools (AI) in hiring and promotion to do the following: 1) such tools must undergo an annual, independent “bias audit,” with a publicly available summary; 2) provide each candidate (internal or external) with 10 business days’ notice prior to being subject to the tool; 3) the notice must list the “job qualifications and characteristics” used by the tool to make its assessment; 4) the sources and types of data used by the tool, as well as the applicable data-retention policy, must be made available publicly (or upon written request from the candidate); and 5) candidates must be able to opt out and request an alternative selection process or accommodation. The law likely applies only to New York City residents who are either job applicants for hire in New York City or employees up for promotion to positions in New York City. However, the law and regulations do not state this clearly. Enforcement of the law was deferred until the publication of the final regulations, which will begin July 5, 2023. Key aspects of the regulations are as follows.

Definition of AEDT. The law defines an automated employment decision tool (AEDT) to be any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues a simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for employment decisions that impact natural persons. The regulations clarify this means a group of mathematical, computer-based techniques that: 1) generate a prediction, meaning an expected outcome for an observation, such as an assessment of a candidate’s fit or likelihood of success, or that generate a classification, meaning an assignment of an observation to a group, such as categorizations based on skill sets or aptitude; and 2) for which a computer at least in part identifies the inputs, the relative importance placed on those inputs, and, if applicable, other parameters for the models in order to improve the accuracy of the prediction or classification.

Next, the regulations further define “to substantially assist or replace discretionary decision making” to mean: 1) to rely solely on a simplified output with no other factors considered; 2) to use a simplified output as one of a set of criteria where the simplified output is weighted more than any other criterion in the set; or 3) to use a simplified output to overrule conclusions derived from other factors including human decision-making. Lastly, the regulations limit applicability to candidates who have actually applied for a specific job. It also does not apply to employment decisions regarding compensation, termination, workforce planning, labor deployment, benefits, workforce monitoring, or performance evaluations. It only covers hiring and promotion. If an AEDT meets all three aspects of the definition, then it is subject to the remaining requirements under the law and regulations.

Bias Audit. A bias audit and a summary of the audit must be clearly and conspicuously posted before use of the AEDT. It must be conducted by individuals who: 1) are objective individuals or groups who are not and have not been involved in the use, development, or distribution of the AEDT; 2) have not at any point during the audit been employed by the employer, vendor, or AEDT developer; and 3) who have no direct financial interest or material indirect financial interest in the use of the AEDT or the vendor that developed or distributed it. The contents of the audit must include calculations of the selection rate for each category (or scoring rate, where the tool issues scores instead of classifications/groupings), including sex categories, race/ethnicity categories, and intersectional categories, as well as the impact ratio of each category.

Notice to Employees. At least 10 business days before use of the AEDT, employers must provide candidates for employment or promotion with a notice which contains: 1) a statement that an AEDT is being used in assessing and evaluating the candidate; 2) the job qualifications and characteristics the AEDT will use in its analysis; 3) if not disclosed elsewhere on its website, the AEDT’s data source, type, and the employer’s data retention policy; and 4) that a candidate may request an alternative selection process or accommodation. The notice may be in a job posting or on the employer’s website or delivered via mail or e-mail to the candidate.

Alternative Selection Process or Accommodation. Employers must also offer either an alternative selection process (ASP) or reasonable accommodation for candidates that request it. Employers must only provide a mechanism for an opt-out but are not required to provide an opt-out.

Penalties. Violations of the law can lead to a civil penalty of $375 for the first violation. Subsequent violations can lead to a civil penalty between $500 and $1,500. Each failure constitutes a separate, daily violation.


Action Items

  1. Review the final regulations here.
  2. Evaluate use of AEDT and coverage for compliance.
  3. Have policies updated regarding the use of AEDT.
  4. Implement required employee and applicant notice.
  5. Implement procedure for conducting bias audit.
  6. Have appropriate personnel trained on the requirements.
  7. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.


Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase