Employers in New York City using artificial intelligence (AI), data analytics or statistical modeling in the hiring or promotion process will need to notify candidates in advance and conduct an annual “bias audit.”

Passed on November 10, 2021, this new law is one of the most significant measures yet seen to address concerns from civil rights groups that machine learning may result in discrimination against women and minorities. The law comes into effect January 1, 2023, with fines of $500 for first-time violations and up to $1,500 for subsequent violations.

Broad Scope

Although one might expect the new law to specifically target algorithmic decision making, the language seems to cover a far wider range of employment tests. The law applies to “automated employment decision tools” defined as “any computational process, derived from machine learning, statistical modeling, data analytics or artificial intelligence” that generates a “simplified output, including a score, classification, or recommendation,” and substantially assists or replaces discretionary employment decisions.¹

Even commonplace online employment assessments, predating AI technology, could be swept in by the broad definition of “automated employment decision tools.” For example, under Title VII of the Civil Rights Act, an employment test must be job related and consistent with business necessity if it has a disparate impact on members of a protected group. Job relatedness typically is established through a...

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