Any employer in New York City that uses hiring software that’s powered by artificial intelligence must first have its tool assessed by the city to ensure it doesn’t include any sexist or racist biases toward certain candidates.
The new law is already receiving major pushback from business groups in the region who are against it.
The law officially went into effect this week. It prohibits all employers from using an AEDT – or automated employment decision tool – for the purposes of screening candidates unless that company has had their tool fully analyzed by a third-party, independent auditor. That company will be searching for any potential biases that are included in the tool, and then will post the results of their findings publicly.
The law was originally passed back in 2021. In addition to the independent audit, it also requires all city employers that use either AI or machine learning tools as part of their hiring process to notify candidates who are from New York City that they used AEDT in the process.
The city’s Department of Consumer and Workforce Protection has been put in charge of enforcing the regulations under the law. On the agency’s website, it outlines that the tools have to be audited once a year at least and “[a]t a minimum, an independent auditor’s evaluation must include calculations of selection or scoring rates and the impact ratio across sex categories, race/ethnicity categories and intersectional categories.”
Companies that are caught violated this law could be fined as much as $500 for their first violation. Every violation after that could result in a $1,500 maximum fine.
Employment agencies and companies have been using AEDTs for years now as part of their hiring processes. Many AI experts, though, have recently warned that their usage could expose businesses to liability because they could be in violation of anti-discrimination laws such as Title VII should the tools they use be found to have a bias against a certain protected class.
Many fears have been shared recently about the rapid development and implementation of AI, especially with the explosion in popularity of ChatGPT. Some employment experts are concerned that the AEDTs could actually create additional risk for hiring processes.
While governments, agencies and private businesses around the country have started to come up with ways to regulate and deal with AI, local business group Job Creators Network says that New York City’s new law is not good.
Alfredo Ortiz, who serves as the group’s president and CEO, issued a statement to Fox Business that said:
“This is just another top-down burdensome regulation that threatens to expose businesses to frivolous lawsuits based on manufactured racism concerns.
“Nobody wants racism or sexism in the hiring process, but analyzing automated hiring processes for racial or sexual disparities will result in trumped-up findings of business discrimination where none occurred. New York City’s Council should repeal such big government actions that reduce entrepreneurship to meaningfully help minorities improve their economic opportunity.”
