October 3, 2022
Finally, some welcome news for employers using automated employment decision tools (“AEDT”) in New York City: The Department of Consumer and Workers Protection (“DCWP”) Suggested rules In an effort to clear up the many ambiguities in New York City’s Artificial Intelligence Act, which goes into effect on January 1, 2023.
New York City law will restrict employers from using the AEDT in hiring and promotion decisions unless it has been the subject of a bias audit by an “independent auditor” more than one year prior to use. The law also imposes certain posting and notification requirements on applicants and employees.
As detailed below, DCWP’s proposed rules are currently under consideration and may invite more questions than answers as uncertainty about the requirements remains. Comments may be submitted to the DCWP, and a public hearing will be held on October 24, 2022 to determine whether any or all of the rules will be formally adopted. Below is a brief summary of the proposed rules.
Clarification of tariffs: Many key terms not defined in the law itself will be defined if the proposed rules are passed.
For example, the proposed rules define an “independent auditor” as “a person or group not involved in the use or development of an AEDT who is responsible for performing an AEDT bias audit.” Although the proposed definition indicates that the vendor who developed the automated exchange processing tool may not be a sufficiently “independent” auditor (depending on the facts and circumstances), the proposed rules provide an example of a vendor providing data permissively for bias checking. It remains to be seen if there will be more clarification on which sellers may perform the required bias audit.
The proposed rules define a “job candidate” as “a person who has applied for a particular job by providing the necessary information and/or items in the form required by the employer or employment agency.” As such, the proposed rules make clear that potential applicants who have not yet applied for a position will not be covered by the new law.
The AI law itself defines an AEDT as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that produces simplified output, including a score, rating, or recommendation, that is used to aid or replace significantly more discretionary decision-making to make employment decisions that affect natural persons.” The proposed rules make clear that the phrase “to significantly aid or replace discretionary decision making” means that the included instrument (a) relies “only on simplified outputs,” (b) uses “simplified output as one set of criteria where the outcome is more weighted than any criterion.” another in the set,” or (c) uses “a simplified output to disprove or modify conclusions drawn from other factors including human decision-making.”
Bias check: The proposed rules also set out bias audit requirements, which include calculating the selection rate and impact ratio for each EEO-1 category in the Equal Employment Opportunity Commission Employer Information Report (in another meaningrace, ethnicity, and gender).
The calculations provided in the proposed rules generally comply with the EEOC Standard Guidelines on Personnel Selection Procedures. Notably, the proposed rules state that the selection rate is “the rate at which individuals in a category are selected to advance in the recruitment process or assign a rating by AEDT” compared to the total number of individuals in a category who have applied for a job or been considered for promotion. Meanwhile, the effect ratio is defined as either (i) the selection rate for a category divided by the selection rate for the most specific category or (ii) the average scores of all individuals in a category divided by the average score of individuals in the highest-scoring category.”
The proposed rules provide examples of bias audits that indicate that these audits should perform a multi-pronged analysis of protected classes (for example, and studying the effect rate for race and gender together) in addition to analyzing each category separately. The proposed rules do not address situations in which data may be incomplete for certain categories. The proposed rules do not address circumstances in which the data set is too small to result in a statistically significant effect ratio.
Regarding the publication of bias audit results, the proposed rules require that the posting be “publicly available in the jobs or jobs section of their website in a clear and conspicuous manner,” and include audit history and distribution, instrument history, selection rates and impact ratios for all categories.
notice: New York City law requires employers to provide individuals who reside in New York City at least 10 business days prior notice, the opportunity to request an alternative selection or residency process, job qualifications or characteristics that the AEDT will use in connection with the assessment, and the holder’s retention policy Work, type and source of data collected for AEDT. The proposed rules outline several different ways that, if passed, employers can provide notice to candidates and employees.
For the law’s requirements regarding notice regarding the use of the AEDT, instructions on how to request an alternative selection process or place of residence, and the qualifications and characteristics of the job used by the AEDT, the proposed rules will allow employers to provide notice to applicants (a) “in the jobs or careers section” of the employer’s website, (b) “in an advertisement for a job” or (c) “by email or US email” at least 10 business days prior to using the AEDT . for employeesEmployers will be able to provide such notice “in a policy or written procedure” at least 10 business days prior to use or through the mechanisms described in (b) and (c) above.
Under the proposed rules, the employer will meet the law’s requirements for notices regarding the type of data collected, the source of the data, and the data retention policy by posting such information “in the jobs or careers section” of its website or by providing in writing “by US mail or email” within 30 days of receiving a request to provide this information.
* * *
Legislatures and regulators have continued to focus on employers’ use of the AEDT. Recently, on September 13, 2022, the EEOC hosted an event with the OFCCP titled Decoded: Can Technology Advance Employment and Equitable Employment?. during the EventEEOC President Charlotte A. Burroughs and OFCCP Director Jenny R. Yang stressed the need for employers to carefully consider the factors that the AEDT assesses, including whether these factors are tailored to the skills and abilities required by the specific job, and to ensure that the AEDT does not have a differential effect based on the categories protected. Accordingly, employers who have already implemented or may implement potable treatment in the workplace should consider the impact of these legislative and regulatory developments to ensure compliance with upcoming laws and strengthen regulatory scrutiny.
 NYC Dep’t Consumer & Worker Prot., Notice of public hearing and opportunity to comment on proposed rulesAnd the https://rules.cityofnewyork.us/wp-content/uploads/2022/09/DCWP-NOH-AEDTs-1.pdf.
 For more details, please see Gibson Dunn’s New York City enacts law restricting use of artificial intelligence in hiring decisions.
 For more details, please see Gibson Dunn’s Keeping up with the EEOC: AI Guidance and Enforcement Action and Danielle Moss, Harris Movson and Emily Lam, State AI laws pose obstacles to employer complianceLaw360 (March 30, 2022), Available here. Available at https://www.gibsondunn.com/wp-content/uploads/2022/03/Moss-Mufson-Lamm-Medley-Of-State-AI-Laws-Pose-Employer-Compliance-Hurdles-Law360-Employment-Authority- 03-30-2022.pdf.
The following Gibson Dunn attorneys helped prepare this client update: Harris Mufson, Danielle Moss, and Emily Maxim Lamm.
Gibson Dunn’s attorneys are available to help answer any questions you may have regarding these developments. To learn more about these issues, please contact the attorney Gibson Dunn you usually work with, and any member of the firm Work and Employment practice group, or the following:
Harris Movson – New York (+1 212-351-3805, email@example.com)
Daniel J. Moss – New York (+1 212-351-6338, firstname.lastname@example.org)
Jason C Schwartz – Co-Chair, Employment and Employment Group, Washington, D.C.
(+1 202-955-8242, email@example.com)
Katherine Virginia Smith – Co-chair, Employment and Employment Group, Los Angeles
(+1 213-229-7107, firstname.lastname@example.org)
© 2022 Gibson, Dunn & Crocher LLP
Lawyer Announcement: The accompanying material has been prepared for general informational purposes only and is not intended to provide legal advice.