NYC AI Bias Law – What You Need to Know to Avoid Fines

Artificial intelligence (AI) has taken the world of work by storm. Whether companies are looking to improve diversity or speed up their hiring process, it’s clear that organizations are looking toward the future of work through the use of AI. Research shows that over 99% of Fortune 500 companies and nearly 1 in 4 of all US employers currently use AI tools. With this in mind, New York City (NYC) is stepping in to make sure that the AI tools being used are free from bias.

The more AI tools we see become available in the marketplace, the more we see AI being misused within the hiring process. While some companies are misusing AI, other companies are unknowingly using AI tools that encourage bias and discrimination within the HR processes they were designed to automate. Noticing this, cities like NYC have decided to step in. The city has implemented a new AI Bias Law to ensure this does not happen – and it’s likely going to affect your company in a significant way.

For more information on the NYC law and how your company can ensure its compliance, continue reading the blog below. 

What is the NYC AI Bias Law?

The New York City AI Bias Law refers to the “AI law” that the NYC Council has implemented called “Local Law 144.” The new law states that not only will companies need to regularly audit their AI tools through a third-party auditing company for bias, but they will have to let candidates and employees know in advance that they will be implementing these AI tools within their hiring and promotional processes. The law affects any company with an office located inside one of NYC’s six boroughs, as well as anybody residing or working in the city.

While the new law was originally slated to go into effect on January 1, 2023, the NYC Council has since pushed back this date. The council will be holding a second public hearing due to a large number of public comments. The law is now scheduled to go into effect on April 15, 2023. The Department of Consumer and Worker Protection (DCWP) is busy working on rules for the law.

Companies found misusing AI tools or using unaudited tools in their talent management process will be fined through the NYC Office of the Corporation Counsel. These companies can be reported to the council, and lawsuits can be filed against them for Title VII employment discrimination. Companies caught using unaudited tools face an initial fine of $500 and then $1500 daily for every subsequent violation. Each day the tool is used without an audit will count as a separate violation. Each candidate or employee not notified in advance will also count as a separate violation. When adding up the costs, a lack of compliance can cause companies thousands of dollars in fines.

If you want to read the details about how to comply with the NYC Law 114, please check our extensive FAQ here.

AI Bias Laws = The War on AI?

While this law might seem like an attack on artificial intelligence as a whole, the truth is that cities like NYC are implementing this law to make sure that only the greatest and most thorough AI tools are being used to help employers find the best possible talent.

We know that AI isn’t perfect. There have been plenty of accounts of artificial intelligence tools being used improperly or discriminating against minorities. Why does this happen? Because the output of AI tools is only as good as the input we provide when creating them. We need to think of ourselves as the teachers and our AI tools are the students. When we provide them with biased data and inaccuracies, that is the behavior that they will learn and their output will reflect this.

New York City doesn’t want to hinder AI from changing our lives for the better. On the contrary, NYC wants to monitor these AI tools so that artificial intelligence can continue to be put to good use. Without audits, things like bias or discrimination creep in and begin hindering people from reaching greater heights.

The Future of AI in the Workplace

Whatever your thoughts surrounding AI are, one thing is certain: artificial intelligence isn’t going anywhere. These tools have transformed the way we hire and manage talent and there’s no going back. Society will simply have to adjust to the “new normal” of AI and smart tools. With more of these tools being incorporated into our daily workflow, the more we will need to audit them for compliance.

New York City is just the first of what is likely to be many cities to introduce a law like this. We are already starting to see other locations around the world following the city’s lead. The state of California is considering introducing similar anti-bias laws and implementing AI audit mandates. Likewise, the EU has also proposed the Artificial Intelligence Act, which will leave AI tools subject to highly specific legal requirements.

While this might seem like society is trying to ban AI from existing, the existence of audits and regulations is to keep us safe. NYC and other places around the world are putting laws into place to protect our society while holding companies accountable for making their AI tools more efficient and bias-free. To comply with the new law, simply perform regular audits of your AI tools and ensure that the right third-party auditors are being used to perform them. If you follow the procedures, then you will have no issues continuing to utilize the power of artificial intelligence throughout your talent management process.

Be sure to read through our extensive NYC AI Bias Law FAQ here to learn how to comply fully with this new legislation.

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