New York is leading the way in regulating HR Tech, with Local Law 144 requiring bias audits of automated employment decision tools (AEDTs) and two assembly bills proposed to increase transparency. Assembly Bill A07859 has similar notification requirements to Local Law 144 and requires employers to notify candidates if an AEDT will be used to evaluate them and provide information about the tool. AB A07859 will come into effect on 1 January of the year following its approval. Holistic AI can help companies prepare for new laws and regulations.

The New York City Council has passed legislation mandating bias audits of automated employment decision tools (AEDTs) to address concerns about discriminatory outcomes. The legislation requires impartial evaluations of AEDTs by independent auditors, assessing for disparate impact against protected characteristics such as race and gender. Employers using AEDTs must inform candidates of the tool's use, provide a summary of bias audits, and disclose the characteristics and data used to make judgments. Penalties for noncompliance can reach $1500. This law applies to employers and employment agencies using AEDTs to evaluate candidates or employees who reside in New York City. It will be enforced from 5 July 2023.

Governments worldwide are implementing laws to regulate the use of AI and other automated systems in the HR Tech sector. In the US, new laws are being proposed and implemented at the federal, state, and local levels to address bias and discrimination and increase transparency in employment decisions. Existing laws also apply to these technologies, adding additional requirements for HR Tech companies to comply with. The regulatory landscape is rapidly evolving, making it crucial for companies to stay up-to-date with the latest laws to avoid legal issues.

California has proposed legislation to limit workplace monitoring and address the use of automated-decision systems to make AI safer and fairer. The latest initiative, AB-331, seeks to regulate tools that contribute to algorithmic discrimination by prohibiting the use of automated decision tools that disfavor individuals based on their protected classification. Deployers must annually perform an impact assessment of ADT tools used to make consequential decisions and notify individuals affected by the decision of the use of ADT. Non-compliance may result in an administrative fine of up to $10,000 per violation or civil action. Exemptions apply to developers with fewer than 25 employees or if the ADT tool impacts fewer than 1,000 individuals per year.

California has proposed amendments to their employment regulations to extend non-discrimination practices to automated-decision systems (ADS) to address bias and discrimination in hiring. Employers with five or more employees are subject to the regulation, and vendors acting on behalf of an employer are considered an employer under the regulation. ADSs are defined as computational processes that screen, evaluate, categorize, recommend, or make or facilitate employment-related decisions, with restrictions on using ADSs to screen out applicants based on protected characteristics. The legislation also prohibits the use of medical or psychological exams, including by using an ADS, before an offer is extended to an applicant. Characteristics protected under the proposed amendments include race, national origin, gender, and age, unless they are shown to be job-related for the position in question. The most recent updates to the regulation extend record retention requirements, and companies are encouraged to conduct audits of their automated-decision systems to identify bias and reduce harm and legal risks.