New York City has enacted Local Law 144, regulating automated employment decision tools (AEDTs) used to evaluate applicants or employees. The law requires yearly bias audits to assess the tool's disparate impact on marginalized groups. Employers and employment agencies must also comply with notification requirements and provide notice of the use of the tool. Penalties for non-compliance start at $500 for the first violation. New Jersey has proposed a similar bill, and the New York State Assembly has also introduced legislation requiring annual bias audits. Holistic AI recommends taking steps early to ensure compliance ahead of the laws coming into effect.

The Society for Human Resource Management (SHRM) and the Society for Industrial and Organizational Psychology (SIOP) held an event discussing the legal and practical implications of using AI-based assessments in hiring. The panel discussed guidelines on how to evaluate and implement AI-based tools for recruitment and legal and ethical implications of using AI-based assessments in hiring practices. Key themes that emerged were compliance with Federal EEO laws, practical challenges in using AI-based assessments, and challenges in complying with the Uniform Guidelines on Employee Selection Procedures. The use of AI and other automated and algorithmic tools in recruitment will soon be even more strictly regulated than traditional hiring practices, with policymakers across the US and EU introducing legislation that will have important implications for employers across the world using these tools.

Human resources teams in business organizations have been using artificial intelligence (AI) technology to innovate their practices, particularly in talent sourcing and management. However, such practices are now being targeted by regulations promoting transparency, such as pay transparency laws. In 2021, Colorado became the first state to enact a pay transparency law requiring employers to disclose salary or pay ranges for open positions. Other states have followed suit, such as California, Washington, and Rhode Island. New York City has also mandated bias audits for automated employment decision tools to evaluate employees for promotion or candidates for employment. The legislation requires employers subject to the audit to make a summary of the results of the bias audit publicly available on their website. Companies are expected to inform consumers about their use of AI and when they are interacting with it. Holistic AI, a responsible AI pioneer, can help enterprises adopt and scale AI confidently by identifying and mitigating risks and using proposed regulations to inform their product.

The Society for Industrial and Organizational Psychology (SIOP) has released guidelines on the validation and use of AI-based assessments in employee selection. These guidelines are based on five principles, including accurate prediction of job performance, consistent scores, fairness and unbiased scores, appropriate use, and adequate documentation for decision-making. Compliance with these principles requires validation of tools, equitable treatment of groups, identifying and mitigating predictive and measurement bias, and using informed approaches. The guidelines also recommend increasing transparency and fairness in AI-driven assessments, documenting decision-making processes, and complying with bias audits in NYC Local Law 144. This article is informational and not intended to provide legal advice.

The enforcement date for NYC Local Law 144 has been pushed back to 5 July 2023, and the city has held a second public hearing on the proposed rules. Auditors must be independent third parties, and there is support for widening the scope of audits beyond the bias risk vertical. There are concerns that the definitions of AEDTs in the updated rules are too narrow, potentially allowing bad-faith actors to argue that they are not within the scope of the legislation. A third version of the rules may be released before the law goes into effect.