New York City Implements Law Requiring Bias Audits on AI Hiring Tools
Organizations in New York City that utilize AI-based technology to sift through resumes and applications for hiring purposes are now required to conduct bias audits of these technologies. The law, which went into effect on July 5, represents the latest effort to regulate how companies use AI tools and combat potential discriminatory outcomes.
The New York City Department of Consumer and Worker Protections issued a final rule implementing the law, which prohibits companies and employment agencies from utilizing automated employment decision tools without an annual bias audit conducted by an independent firm. In addition, organizations are obligated to publish a public summary of the audit results, inform candidates when automated decision tools are utilized in evaluating their backgrounds, and notify candidates about the specific job qualifications and characteristics used by the tool to make selections.
Noncompliance with the law carries significant civil penalties, starting at $500 for each violation and escalating to $1,500 for subsequent violations. The aim of this legislation is to bring more transparency and accountability to the use of AI in the hiring process.
This initiative reflects a broader trend seen not only in New York City but also across the United States and globally. Several other states, such as California, Colorado, Massachusetts, New Jersey, and Washington, D.C., have proposed legislation and regulations addressing AI-related concerns. At a national level, the National Institute of Standards and Technology has released its AI Risk Management Framework, while the U.S. Equal Employment Opportunity Commission is developing a strategic enforcement plan to tackle AI bias. Furthermore, the European Commission has proposed the Artificial Intelligence Act to harmonize regulations on AI.
This law serves as a wake-up call for leaders to reassess and refresh their AI-related strategies and governance models, said Ryan Hittner, an Audit & Assurance managing director with Deloitte & Touche LLP. With increasing awareness around AI bias, data privacy concerns, and potential business disruption, challenges related to AI usage will likely continue to evolve.
In light of these developments, there are several actions leaders can take to prepare for compliance with AI-technology regulations and standards. These include reviewing existing laws and proposals, conducting an inventory of AI technologies within their organizations, designing and implementing ethical AI strategies and policies, establishing AI risk frameworks and governance models, providing employee guidance and training, identifying and remediating AI issues, and engaging with vendors and third parties regarding compliance with regulations and policies.
As the use of AI technologies continues to evolve, it is crucial for organizations to prioritize risk mitigation and governance processes and adapt to changing regulatory environments. By doing so, they can ensure the responsible and accountable use of AI while avoiding potential biases and discriminatory outcomes.
The implementation of this law in New York City signifies a step forward in addressing AI bias and highlights the growing importance of ethical AI practices in the hiring process. As organizations navigate the complexities of AI technologies, it is essential for them to remain vigilant and proactive in safeguarding against potential biases, thereby fostering a fair and inclusive hiring environment.
