New York City Proposes Rules to Clarify Upcoming Artificial Intelligence Law for Employers

New York City Proposes Rules to Clarify Upcoming Artificial Intelligence Law for Employers

October 3, 2022

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Finally, good news for employers using Automated Employment Decision Tools (“AEDTs”) in New York: the Department of Consumer and Worker Protection (“DCWP”) has proposed rules in the purpose of clarifying many ambiguities in New York’s artificial law. Intelligence Act (“IA”), which comes into force on 1 January 2023.[1]

New York City law will prevent employers from using the AEDT in hiring and promotion decisions unless it has been audited for bias by an “independent auditor” no more than one year before its use.[2] The law also imposes certain posting and notice requirements on candidates and employees.

As detailed below, the DCWP’s proposed rules are currently under review and may well raise more questions than answers, as uncertainty regarding the requirements continues. Comments can be submitted to the DCWP, and a public hearing will be held on October 24, 2022 to determine whether all or part of the rules will be formally adopted. Below is a brief summary of the proposed rules.

Clarify definitions: Several key terms that are not defined in the law itself will be defined if the proposed rules are adopted.

For example, the proposed rules define an “independent auditor” as “a person or group who is not involved in the use or development of an AEDT and who is responsible for carrying out a biased audit of this AEDT”. Although the proposed definition signals that a provider who has developed the AEDT may not be a sufficiently “independent” auditor (depending on the facts and circumstances), the proposed rules provide an example of a provider who authoritatively provides data for a biased audit. It remains to be seen if there will be further clarification regarding which vendors can perform the required bias audit.

The proposed rules define “job applicant” as “a person who has applied for a specific position by submitting the necessary information and/or items in the format required by the employer or employment agency”. Thus, the proposed rules specify that potential candidates who have not yet applied for a position would not be covered by the new law.

The AI ​​Act itself defines an AEDT as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that emits a simplified output, including including a score, classification, or recommendation, which is used to substantially assist or substitute for discretionary decision-making in making employment decisions that impact individuals. The Proposed Rules clarify that the phrase “for substantially aiding or replacing discretionary decision-making” means that the tool covered (a) relies “only on a simplified result”, (b) uses “a simplified result as a set of criteria where the result is weighted more than any other criterion of the set”, or (c) uses “a simplified output to override or modify conclusions drawn from other factors, including human decision-making”.

Bias Audit: The proposed rules also specify the requirements for a bias audit, which include calculating the selection rate and impact rate for each EEO-1 category on the Commission’s Employer Information Report for the equal employment opportunity (that’s to sayrace, ethnicity and gender).

The calculations set forth in the proposed rules are generally consistent with the EEOC’s Uniform Guidelines on Employee Selection Procedures. Notably, the proposed rules explain that the selection rate is “the rate at which people in a category are either selected to advance through the hiring process or assigned to classification by an AEDT” relative to the total number of people in the category who applied for a position or were considered for a promotion. As for the impact ratio, it is defined as “either (1) the selection rate of a category divided by the selection rate of the most selected category, or (2) the average score of all the individuals of a category divided by the average score of individuals in a category”. the highest category.

The proposed rules provide examples of bias audits that indicate that these audits should conduct an intersectional analysis of protected categories (for example, examining the impact rate for race and gender combined) in addition to analyzing each category independently. The proposed rules do not address situations where data may be incomplete for certain categories. The proposed rules also do not address cases where the data set is too small to yield a statistically significant impact report.

With respect to posting the results of the bias audit, the proposed rules would require posting to be made “publicly available on the Careers or Employment section of their website in a clear and conspicuous manner” and would include the date of the audit, the date distribution of the tool, as well as selection rates and impact ratios for all categories.

To remark: New York City law requires employers to provide New York City residents at least 10 business days notice of the use of the AEDT, the opportunity to request an alternative screening process or accommodation, qualifications or professional characteristics that the AEDT uses in the context of the assessment, the employer’s retention policy, and the type and source of data collected for the AEDT. The proposed rules outline several different ways in which, if adopted, employers can provide notice to applicants and employees.

Regarding the legal requirement for notice regarding the use of an AEDT, instructions on how to request an alternate selection process or accommodation, and the qualifications and job characteristics used by the AEDT, the proposed rules would allow employers to notify candidates (a) “in the careers or jobs section” of an employer’s website, (b) “in a job posting” or (c) “by mail or email in the United States” at least 10 working days before using the AEDT. For employeesemployers would be able to provide this notice “in a written policy or procedure” at least 10 business days prior to use or through the mechanisms described in points (b) and (c) above.

Under the proposed rules, an employer would satisfy the legal requirement for notice regarding the type of data collected, the source of the data and the data retention policy by posting such information “in the Careers or Jobs section” of their website. or by providing in writing “by mail or e-mail within the United States” within 30 days of receipt of a request to provide such information.

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Legislatures and regulators have continued to focus on employers’ use of the AEDT.[3] Most recently, on September 13, 2022, the EEOC co-hosted an event with the OFCCP titled Decoded: Can Technology Advance Fair Recruitment and Hiring?. During the event, EEOC President Charlotte A. Burrows and OFCCP Director Jenny R. Yang emphasized the need for employers to carefully consider the factors assessed by the AEDT, in particular whether these factors are suited to the skills and abilities required by the specific position, and to ensure that the AEDT does not have a disparate impact according to the protected categories. Accordingly, employers who have already implemented or may implement AEDT in the workplace should consider the impact of these legislative and regulatory developments to ensure compliance with upcoming laws and enhanced regulatory oversight. .

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[1] NYC Dep’t Consumer & Worker Prot., Notice of Public Hearing and Opportunity to Comment on Proposed Ruleshttps://rules.cityofnewyork.us/wp-content/uploads/2022/09/DCWP-NOH-AEDTs-1.pdf.

[2] For more details, please see Gibson Dunn New York City enacts law restricting use of artificial intelligence in employment decisions.

[3] For more details, please see Gibson Dunn’s Keeping Up with the EEOC: Artificial Intelligence Guidance and Enforcement Action and Danielle Moss, Harris Mufson and Emily Lamm, Mixing State AI Laws Pose Obstacles to Employer ComplianceLaw360 (March 30, 2022), available at https://www.gibsondunn.com/wp-content/uploads/2022/03/Moss-Mufson-Lamm-Medley-Of-State-AI-Laws-Pose-Employer-Compliance-Hurdles-Law360-Employment-Authority- 30-03-2022.pdf.


The following Gibson Dunn attorneys assisted in preparing this client update: Harris Mufson, Danielle Moss and Emily Maxim Lamm.

Gibson Dunn attorneys are available to answer any questions you may have regarding these developments. To learn more about these matters, please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s labor and employment law practice group, or the following individuals:

Harris M. Mufson – New York (+1 212-351-3805, hmufson@gibsondunn.com)

Danielle J. Moss – New York (+1 212-351-6338, dmoss@gibsondunn.com)

Jason C. Schwartz – Co-Chair, Labor and Employment Group, Washington, DC
(+1 202-955-8242, jschwartz@gibsondunn.com)

Katherine VA Smith – Co-Chair, Labor and Employment Group, Los Angeles
(+1 213-229-7107, ksmith@gibsondunn.com)

© 2022 Gibson, Dunn & Crutcher LLP

Publicity for Lawyers: The attached materials have been prepared for general information purposes only and are not intended to be used as legal advice.

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