Employer Promotion Code: Monitor
The increasing use of artificial intelligence (AI) in employment-related decisions has prompted the New York City government to regulate its use by employers, particularly due to concerns about possible unequal treatment of job applicants due to the programming or operation of the AI. New York City’s Local law 144 (LL 144) is effective January 1, 2023 and requires employers using automated employment decision tools (AEDTs) in hiring and promotions to comply with a bias testing requirement and to provide communications and disclosures related to the testing results and use of the AEDT provide. Proposed rules were issued in September and a hearing was held on November 4, 2022. It is unclear if final rules will be issued before the end of 2022 or if the effective date will be delayed. Other jurisdictions within the US and around the world are also in various stages of addressing employment-related uses of AI.
LL 144 of New York City defines an AEDT as a “computational process derived from machine learning, statistical modeling, data analysis, or artificial intelligence that produces a simplified output, including a score, classification, or recommendation, that is used to substantially assist or “Replace discretionary decisions to make employment decisions affecting individuals”, but excludes tools that do not affect the decision-making process (such as junk e-mail filters and antivirus software). LL 144 prohibits the use of an AEDT unless:
- A bias audit is completed within one year of its use
- The results will be made publicly available
- Notice is provided to job applicants regarding the use of AEDTs
- As a precaution, candidates or employees may request an alternative scoring system
The proposed rules address several issues related to LL 144 compliance, including clarifications on the definition of an AEDT, the focus of the bias audit, the data that must be made publicly available, and compliance with notification and disclosure requirements. However, several questions remain unanswered, including (1) which companies are allowed to conduct the bias audit, (2) whether the audit must be conducted annually, and (3) the definition of an alternative assessment process or the types of options that are required to be available be asked.
Several US states (e.g., Illinois and Maryland) and some cities have enacted or are considering legislation that could impact the use of AI in hiring and other employment decisions. In the European Union, the European Commission is working on an artificial intelligence law to regulate the use of AI in general. The law would divide the use of AI into four broad risk categories (to citizens’ rights):
- Unacceptable risks, such as governments using AI for social scoring.
- High-risk uses, e.g. B. in education or training, employment, management of workers and biometric remote identification systems.
- Applications with limited risk and specific transparency obligations (e.g. a requirement to inform users when interacting with AI such as chatbots).
- AI with minimal risk, such as B. Spam filters. From the Commission’s point of view, the vast majority of AI systems currently in use belong to the category of minimal risks.
The US federal government has also focused on the use of AI in employment decisions. The Equal Employment Opportunity Commission (EEOC) issued guidance in May 2022 outlining how certain employment-related uses of AI could potentially violate the Americans with Disabilities Act (ADA). In October, the Biden administration released a draft AI Bill of Rights designed to guide the design, use, and deployment of automated systems. Brazil, Canada and the United Kingdom are working (as well as other governments) to develop similar laws and frameworks.
Effects on the employer
The application of AI in employment is already well ahead of the development of regulatory regimes governing its use. The EEOC has estimated that more than 80% of US employers use some form of AI in their work and in hiring decision-making. Employers should monitor the development of legal restrictions and requirements for the use of AI in work-related decisions. For employers with employees in New York City, New York City law is currently scheduled to go into effect in 2023; It can be a good test case to show how regulation can impact the use of AI in employment-related decisions.