July 5 is Almost Here: Are You Using Automated Employment Decision Tools in NYC?

On May 22, 2023, the Department of Consumer and Worker Protection (“DCWP”) held a roundtable on Local Law 144, New York City’s law regulating the use of Automated Employment Decision Tools (“AEDT”), which will go into effect on July 5.  The roundtable followed the “Final Rule” for the New York AEDT law and clarified several open questions that the Final Rule had left unanswered, including the applicability of the law, the scope of data requirements for the bias audit, and the notice requirement.

Applicability of the Law

Local Law 144 provides that “[i]n the City, it shall be unlawful” for an employer to use an AEDT unless the tool has been independently audited and notice has been provided to “each such candidate or employee who resides in the city.”  Local Law 144, § 20-871 (emphasis added).  This language raised questions regarding the applicability of the law, particularly in the event a New York City resident applies for a remote position or a position that is otherwise not located in New York City.  The DCWP clarified at the roundtable that the key factor in determining whether the law applies is where the position is physically “located.”  Specifically, the DCWP said the following guidelines apply:

• For a position located in NYC, a bias audit is required, and notice is required to NYC residents;
• For a position located outside of NYC, neither a bias audit nor notice is required, regardless of the candidate’s residence;
• For a fully remote position:

- If the employer only has a NYC office, a bias audit is required, and notice is required to NYC residents;

- If the employer does not have a NYC office, neither a bias audit nor notice is required, regardless of the candidate’s residence;

- If the employer has offices both within and outside of NYC, the analysis is “fact specific.” This analysis will likely include factors such as whether the employee will ever need to report to an office, and if so, which one.

While this guidance provides much-needed clarification as to the scope of the law, open questions remain, particularly with respect to the “fact-specific” analysis required for remote work where an employer has multiple offices, including in NYC. 

Data Requirements

In response to questions submitted by stakeholders, the DCWP clarified that the Final Rule is intended to give employers flexibility with regard to the historical data used for the bias audit.  As a result, there are no geographical or time parameters that an employer is required to follow in providing data for the audit.  The employer, however, is required to provide an explanation of the data used in its summary of the audit results.  A decision to limit the historical data provided to certain time periods, moreover, may trigger anti-discrimination laws.  Additionally, an employer cannot justify use of test data on the basis that it does not possess sufficient historical data if the employer has imposed its own limits on the type of data to be provided.

Notice Requirements

Under the law, employers are required to provide ten business days’ notice of the use of an AEDT to candidates/employees residing in the City.  The DCWP clarified that this notice does not need to be specific to any particular position, meaning that the employer may post a general notice on the employment section of its website, and ten business days after that notice is first posted, the employer may begin using the AEDT. 

Further Guidance and Action Items

The DCWP is preparing a set of Frequently Asked Questions with additional guidance on the application of Local Law 144.  In the meantime, the law will become effective on July 5.  Covered employers that intend to use AEDTs to substantially assist in employment decisions after that date will need to ensure that they obtain an independent bias audit and provide candidates with notice ten business days prior to the use of any AEDT, effectively setting a deadline of June 20^thfor notice of AEDTs to be used on July 5 to be provided.  We will continue to monitor the evolution of this new law and provide updates as warranted.