NYC Local Law 144

What the law covers

Local Law 144 of 2021 amended the NYC Administrative Code, and the Department of Consumer and Worker Protection (DCWP) began enforcing it on 5 July 2023 under its final rules. It was the first US law to require bias audits of hiring algorithms.

An automated employment decision tool is a computational process derived from machine learning, statistical modeling, data analytics or artificial intelligence that issues a simplified output, such as a score, classification or recommendation, and is used to substantially assist or replace discretionary decision-making for employment decisions. The DCWP rules read 'substantially assist or replace' narrowly. A tool is covered when the employer:

• relies solely on its output with no other factors considered;
• uses its output as one of a set of criteria and weights it more than any other criterion; or
• uses its output to overrule conclusions from other factors, including human judgment.

Employment decisions means screening candidates for hiring or employees for promotion. The law applies to roles located in New York City, including at least part-time in an NYC office, and to fully remote roles tied to an NYC office. It protects candidates and employees who are NYC residents for the notice rules. Resume ranking, AI interview scoring and assessment scoring tools are the usual examples; it is broader than most people assume for AI in recruitment and narrower than most activists wanted.

Bias audit requirements

Before using an AEDT, the employer or employment agency must make sure a bias audit has been conducted by an independent auditor no more than one year earlier, and repeat it at least annually while the tool is in use. Independent means the auditor was not involved in using, developing or distributing the tool, is not employed by the employer or vendor, and has no direct or material financial interest in either.

The audit calculates, for sex, race and ethnicity (using the EEO-1 categories), and the intersection of the two:

• Selection rate: the share of each category that the tool moves forward or classifies favorably, for tools that select.
• Scoring rate: the share of each category that scores above the sample's median, for tools that score.
• Impact ratio: each category's rate divided by the rate of the most selected or highest-scoring category.

The audit uses historical data from the employer's own use where available. If there is not enough, it can use other employers' data for the same tool or, in limited cases, test data, with an explanation. A category representing less than 2% of the data can be left out of the impact ratio calculation, with the reason stated.

The law does not set a pass mark. An impact ratio of 0.70 does not stop you using the tool under Local Law 144, but it is public, and it is evidence a plaintiff could use under federal, state or city anti-discrimination law, where the four-fifths rule is a common reference point.

Publication and notice rules

Before use, the employer must publish on the employment section of its website a summary of the most recent audit: the date of the audit, the source and an explanation of the data, the number of people assessed, the number in an unknown category, the selection or scoring rates and impact ratios for every category, and the date the tool was first used. The summary has to stay up for at least six months after the tool was last used. A clear link is fine.

Candidates and employees who live in NYC must be told, at least 10 business days before the tool is used:

1. that an AEDT will be used to assess them;
2. the job qualifications and characteristics the tool will use; and
3. how to request an alternative selection process or a reasonable accommodation under other laws.

The notice can go in the job posting, on the careers site or by email or mail. The law does not require you to offer an alternative process, only to explain how to ask. Information about the type and source of data the tool collects and your retention policy must be posted or provided within 30 days of a written request.

Worked example: a staffing firm placing NYC call center agents

A staffing agency fills about 400 customer service roles a year in Manhattan and Brooklyn. It uses a vendor tool that scores recorded voice screens from 1 to 100, and recruiters only call candidates scoring 65 or higher. That is a clear AEDT: the score replaces recruiter judgment at the first cut.

The operations director, Tom, commissions an independent audit using 14 months of the agency's own data, covering 6,200 candidates. Scoring rates above the median range from 46% to 55% across sex and race categories; the lowest impact ratio is 0.84. He posts the summary on the careers page, adds the notice language to every NYC job ad and to the application confirmation email, and blocks recruiters from contacting candidates for 10 business days after the notice. When the audit shows that one intersectional category had a ratio below 0.80 in a small sample, he asks the vendor to review the scoring features and has recruiters manually review the band from 55 to 64.

Penalties, enforcement and common mistakes

Civil penalties are up to $500 for a first violation and each additional violation on the same day, and $500 to $1,500 for each later violation. Each day a tool is used without a compliant audit, and each failure to give notice, counts separately. DCWP takes complaints, and candidates keep their rights under other discrimination laws.

Mistakes we see most often:

• Assuming 'a human makes the final decision' takes a tool out of scope, while recruiters in practice only review the top-ranked group.
• Relying on a vendor's audit of its whole customer base without checking it meets the rules for your use.
• Posting the audit summary but forgetting the 10-business-day notice, which matters most for fast-moving hourly hiring.
• Letting the audit lapse past 12 months.
• Treating compliance with Local Law 144 as proof the tool is fair. It is a disclosure law.

Other jurisdictions regulate automated decision systems differently, so multi-state employers should map each law separately. This is general information, not legal advice.