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Technology from the Top: AI, Data and the Future of Business with Today’s CIOs

Technology from the Top: AI, Data and the Future of Business with Today’s CIOs – Shannon Johnston

On May 22, 2023, the New York City Department of Consumer and Worker Protection (“DCWP”) held an employer roundtable about <a href="https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=4344524&GUID=B051915D-A9AC-451E-81F8-6596032FA3F9&Options=ID%7CText%7C&Search=">Local Law 144</a>, New York City’s law regulating the use of Artificial Intelligence in the employment context—specifically, automated employment decision tools (“AEDT”). With the July 5, 2023 enforcement date rapidly approaching, the DCWP addressed several open questions that remained after its issuance of the <a href="https://www.bakerdatacounsel.com/ai/what-about-the-robots-that-are-already-here-new-york-city-begin-enforcement-artificial-intelligence-applications-july-5-2023/">final rules</a>, including the applicability of the AEDT law, bias audit data and notice requirements, and talent-sourcing AEDTs.



The DCWP additionally stated its intention to release FAQ guidance to assist employers with compliance. While no indication has been given as to when those FAQs will be released, the DCWP emphasized its intention to still begin enforcement on July 5.



Applicability of the Law – Does the NYC AEDT Law Cover Remote Jobs?



The NYC AEDT law 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” (emphasis added). While the law is clear that notice must be provided to candidates or employees residing in the city, the final rules did not address whether the law applies to those in positions located in NYC, positions located outside NYC, or fully remote positions. At the roundtable, the DCWP clarified that the key factor in determining whether the law applies is where the position is physically located. Specifically, the DCWP provided the following guidelines:



For a position located in NYC – The law applies; a bias audit is required, and notice is required to be given to NYC residents.



For a position located outside NYC – The law does not apply; neither a bias audit nor notice is required, regardless of the candidate’s residence (even if a NYC resident).



<ul>
<li>For example, if the position is in Jersey City, New Jersey, and the candidate resides in Brooklyn or Manhattan, the position does not fall within the scope of the law, and neither a bias audit nor notice is required for an AEDT being used for that position.</li>
</ul>



For a fully remote position:



If the employer only has an NYC office – The law applies; a bias audit is required, and notice is required to be given to NYC residents.



If the employer does not have an NYC office – The law does not apply; neither a bias audit nor notice is required, regardless of the candidate’s residence.



If the employer has offices both within and outside NYC – The analysis will be fact-specific. The DCWP cited the following factors:



<ul>
<li>How often the employee in question will work on location in NYC;</li>
</ul>



<ul>
<li>For which physical location the remote employee will perform work; and</li>
</ul>



<ul>
<li>Whether the remote employee will ever have to go to an office, and, if so, where.</li>
</ul>



<ul>
<li>Although this guidance provided much-needed clarification on the law’s scope, open questions remain, specifically regarding the “fact-specific” analysis and factors.</li>
</ul>



Bias Audit Data Requirements



The DCWP explained that the final rules were intended to provide employers with flexibility regarding the use of historical data for the bias audit. The DCWP clarified there are no geographical or time parameters required for such data; however, employers must provide an explanation of the data used in their summary of the bias audit results. The DCWP further cautioned that a decision to limit the historical data to certain time periods may trigger certain anti-discrimination laws.



Notice Requirements



While the final rules made it clear that notice of an AEDT can be provided in a job posting, via U.S. postal mail or email, on the employment section of an employer’s career website, or through a document policy or procedure (for employees applying for promotions), the DCWP further clarified that notice does not have to be position-specific and the 10-business-day notice requirement is measured from the time the first notice is posted.



AEDTs for Talent Sourcing



Based on questions submitted prior to the roundtable, employers raised concerns about the impact of the law on employers that use AEDTs as part of their talent-sourcing strategies, such as when a tool is used to evaluate internal or external resume databases or publicly available information concerning individuals who applied for a different position at a different point in time or individuals who never applied for a position with the employer or employment agency at all.



The DCWP clarified that the law applies only to candidates or employees who have actually applied for a specific position. The DCWP thus explained that if an AEDT is used only to evaluate candidates that have not yet applied for a specific position, neither a bias audit nor notice is required. The DCWP pointed to Section 5-300 of the final rules, which defines “candidate for employment” as “a person who has applied for a specific employment position by submitting the necessary information or items in the format required by the employer or employment agency.”

core/freeform

Data Counsel

New York

Partner

James A. Sherer

Washington, D.C.

Associate

Brittany  A. Yantis

Artificial Intelligence (AI)

Digital Assets and Data Management

As July 5th Rapidly Approaches, the New York City DCWP Provides Much-Needed Guidance on Artificial Intelligence Employment Practices and AEDTs

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