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Answers to your questions about NYC’s new law on automated employment decision tools

Updated 6/22/2023

Here at CodeSignal, our mission is to help companies go beyond the noise of technical hiring with automated and live technical interviewing solutions. In this same spirit, we aim to go beyond compliance by ensuring our product and processes are fair, as well as supporting clients in navigating ongoing legislation. 

Below, we answer common questions our customers are asking about New York City Local Law 144, NYC’s new law on employers’ use of automated employment decision tools in hiring, that is set to go into effect in 2023. 

Disclaimer: The information provided in this document does not, and is not intended to, constitute legal advice; instead, all information available in this document is for general informational purposes only.    

What does NYC Local Law 144 say? 

New York City Local Law 144 regulates employers and employment agencies’ use of “automated employment decision tools” (AEDT) in making employment decisions. It applies to all New York City-based employers and employees. In summary, the law requires employers to:

  • Ensure automated employment decision tools have undergone an independent bias audit in the last year 
  • Publicly display a summary of the results of the most recent bias audit and distribution data for the tool on the employer or employment agency’s website
  • Provide candidates with 10 business days of advanced notice before the use of an automated tool 
  • Provide candidates with 10 business days of advanced notice regarding the job qualifications and characteristics the tool will assess 
  • Provide information on the type, source, and retention policy relating to data collected for the AEDT

What are “automated employment decision tools”? 

AEDT includes “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making” for employment decisions.

The DCWP further clarified the phrase “to substantially assist or replace discretionary decision making” to mean:

  • “to rely solely on a simplified output (score, tag, classification, ranking, etc.), with no other factors considered; or
  • to use a simplified output as one of a set of criteria where the simplified output is weighted more than any other criterion in the set; or
  • to use a simplified output to overrule conclusions derived from other factors including human decision-making.”

Is CodeSignal’s product considered an “automated employment decision-making tool”?

As the law is currently written, CodeSignal is unlikely to be considered an AEDT, though we still recommend our clients seek legal advice.

When does NYC Local Law 144 go into effect?  

The statute takes effect on January 1, 2023. However, it will not be enforced until July 5, 2023. 

Who is considered a “candidate for employment”?

A candidate for employment is “a person who has applied for a specific employment position by submitting the necessary information and/or items in the format required by the employer or employment agency.” This law applies to employers with an office located in New York City.

What is the “bias audit” mentioned in NYC Local Law 144?

Employers must have an “independent auditor” assess whether the use of the tool results in disparate impact based on categories such as race, ethnicity, or sex. The final version of the rules define a bias audit as, “an impartial evaluation by an independent auditor.” This independent auditor must be a person or group who is objective and impartial, and cannot be involved in using, developing, or distributing the AEDT. Bias audits must include selection ratios and impact ratios for demographic categories (e.g., race, gender), as well as intersectional groups (e.g., race x gender).

What happens with the bias audit results?

Bias audit results must be posted on the employer’s or employment agency’s websites annually. The posting should include the data of the most recent bias audit, as well as the distribution date of the AEDT. Employers or employment agencies must keep the results and associated data posted for at least 6 months after the latest use of the AEDT.

What information should an AEDT notice contain? 

An AEDT Notice should be completed 10 days in advance of a candidate completing an AEDT. It should include the following information:

  • Distribution date
  • Employer or employment agency name
  • Job position title
  • Brief explanation of AEDTs
  • Purpose(s) for which the AEDT system will be used
  • Types of AEDTs used
  • Job qualifications and characteristics the AEDT will evaluate
  • Process for requesting an accommodation (if relevant/possible)
  • AEDT data practices

The updated rules give employers flexibility for how they complete this notice, including: listing on their website, including in the job posting(s), or providing candidates notice via U.S. mail or e-mail.

Employer and vendor responsibilities 

Since the passage of Local Law 144 in December 2021, NYC’s Department of Consumer and Worker Protection (DCWP) released two proposed updates to the rules, as well as hosted two public hearings to discuss changes. In April 2023, NYC’s DCWP released a final version of these rules, with an enforcement date of July 5, 2023. Throughout these changes, CodeSignal’s Assessment Research team has been actively monitoring the shifts, attending public hearings, and partnering with legal counsel to ensure compliance with the new law.

While NYC Local Law 144 has some ambiguities, CodeSignal is committed to ensuring clients feel confident about what is required of them. 

Employer’s ResponsibilityCodeSignal’s Responsibility
– Provide disclosure of the use of automated employment decision tools
– Hire an independent auditor to conduct a bias audit annually*
– Publicly post results of such bias audit 
– Provide candidates 10 days advance notice with information about the use of an automated decision tool, as well as the the job qualifications and characteristics the tool will assess 
– Provide candidates notice of the type, source, and retention policy relating to data collected for the AEDT

*Assuming the use of an AEDT
– Support clients with understanding how CodeSignal aligns with NYC Local Law 144 
– Partner to provide necessary data for any bias audits for candidates or roles located in NYC
– Provide process documentation of how CodeSignal’s processes work

Additional CodeSignal support offerings

In addition to remaining complaint with NYC Local Law 144, further offerings to support legal defensibility and fairness include: 

Learn more

Want to learn more about how CodeSignal can help you reach your technical hiring goals while maintaining compliance with ever-changing employment regulations? Schedule a discovery call today. 

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