Updated Rules Issued for New York City’s Local Law 144 on Automated Employment Decision Tools

By: Dave Schmidt and Amanda Allen 

In late December 2022, the New York City (NYC) Department of Consumer and Worker Protection (DCWP) issued an updated set of proposed clarification rules for Local Law 144 (regulating the use of automated employment decision tools (AEDTs) wherein hiring decisions are made or substantially assisted by algorithmically-driven mechanisms). 

Enforcement of the law, which was passed in December 2021, was delayed from a January 1, 2023, start date and is currently set to begin on April 15, 2023. The updated rules issued by the DCWP last month are currently open for public commentary. A public hearing is scheduled for 11:00 am EST on Monday, January 23, 2023, and the DCWP is accepting written commentary up until the hearing. Specific instructions for providing written or oral commentary are provided in the proposed rules. 

• Make sure to click on the “tinyurl.com” link in advance of the hearing to register and receive the meeting invite for the hearing. 

Given the broad-spanning nature of this law, the first set of proposed rules provided by the DCWP drew significant attention with almost 180 pages of written commentary and 90 minutes of verbal commentary at the public hearing. The DCWP used the provided commentary to make revisions to the proposed rules. Some of the changes made to the proposed rules are noted below. 

• § 5-300. Definitions. 

• • Added a definition for Scoring Rate: “the rate at which individuals in a category receive a score above the sample’s median score …” 
  • Changed the definition of the Impact Ratio calculation where the AEDT provides a score but does not assign a classification – the Scoring Rate now serves as the basis of the impact ratio calculated in this condition. 
  • Added definitions for Historical Data (data collected during an employer’s use of the AEDT) and Test Data (any data used for the bias audit that is not Historical Data). 
  • Updated the definition of an Independent Auditor to clarify that individuals or groups involved in the development or distribution of the AEDT, or employed by the vendor or the employer, may not serve as an independent auditor. 

• § 5-301. Bias Audit. 

• • Clarified that an AEDT may not be used if more than one year has passed since the bias audit was conducted. 
  • Clarified that the bias audit is to include an analysis of gender, race/ethnicity, and the intersectional combination of gender and race/ethnicity. 
  • Consistent with the definition of independent auditor, stated that data will be provided to the auditor by the employer or vendor so that analyses may be conducted. 

• Added a section § 5-302. Data Requirements. 

• • Incorporating the newly defined historical data and test data terms, identified conditions under which each type of data might be used. 
  • If test data are used for the bias audit, an explanation must be provided of where these data come from and why historical data were not used. 
  • Identified conditions under which a bias audit for an AEDT used by multiple employers might be conducted to meet the requirements. 

• § 5-303. Published Results. 

• • Must also include the “source and explanation of the data used to conduct the bias audit” 

• § 5-304. Notice to Candidates and Employees. 

• • Better clarified that instructions must be provided to allow individuals to request an alternative selection process, or a reasonable accommodation, where required by other laws (e.g., Americans with Disabilities Act, 1990). 
  • Added the need to provide information “in a clear and conspicuous manner about its AEDT data retention policy, the type of data collected for the AEDT, and the source of the data” 

In addition, several proposed rules did not change or had only minor updates.  Some of these are noted below. 

• § 5-300. Definitions. 

• • AEDT and the “Substantially Assists” clause 
  • Machine Learning, Statistical Modelling, Data Analytics, or Artificial Intelligence 
  • The Selection Rate Impact Ratio calculation where the AEDT assigns a classification (which aligned to the Uniform Guidelines on Employee Selection Procedures, 1978) 

• § 5-304. Notice to Candidates and Employees. 

• • Retained that employer must provide notice 10 days prior to use of an AEDT 

• • No requirement to create an alternative process beyond what is needed for providing accommodations in accordance with the ADA (1990) and ADAAA (2008). 

Following the hearing on January 23rd, it is reasonable to expect that there will be a final revision to the proposed rules. The timing of such updates is unknown at this juncture. However, with the April 15th enforcement day looming, the DCWP surely realizes that the rules need to be finalized as soon as possible to allow sufficient time for bias audits to be completed and published. 

DCI will continue to monitor these developments and post more information as it becomes available.