NYC’s bill to regulate automated hiring software faces challenges

The first-of-its-kind law was meant to reduce bias in hiring, but some worry a limited scope could undercut its power to improve hiring practices.
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4 min read

If you’re the parent of a preteen and are looking for new ways to effectively say, “I’m not mad, I’m just disappointed,” we wish you’d caught New York City’s Department of Consumer and Worker Protection's (DCWP) virtual hearing on the status of its automated employment decision tools (AEDT) law, Local Law 144. AI ethicists, politicians, and CEOs alike put on a masterclass in finger-wagging.

The law, passed in 2021, requires employers that use AEDTs to independently audit the tech for bias and publish the results. The final rules have been more eagerly anticipated in some circles than the reveal of Kylie Jenner’s baby’s name. (It’s Aire, ICYMI.) During a public hearing on Monday, New York City Council Majority Whip Selvena Brooks-Powers shared why she was one of the 38 lawmakers to originally vote for Local Law 144, calling it a “massive opportunity” to bring about “real progress on racial equity in hiring.”

However, creating a first-of-its-kind law has proved difficult. Employers and HR pros have had questions, including what it means to perform a bias audit and who counts as an independent auditor. After proposing one set of rules and receiving criticism in public comments in October 2022, the DCWP pushed back the effective date of the law from January 1, 2023, to April 15, 2023, and released a new draft of the policy in late December.

During Monday’s hearing, seven of the 10 commentators had the same critique: The DCWP’s interpretation of when the law might apply is too narrow.

No reach, no teeth. Between the passing of the law and the drafts of final rules, the DCWP narrowed its scope so that the law would only kick in if HR used AEDTs to “substantially assist or replace discretionary decision making…with no other factors considered.”

“The problem, however, is that this isn’t how hiring works,” Brooks-Powers said in her testimony on Monday. “Human decision-making always has some role to play in the hiring process.”

Very few employers, commentators said, rely on a single data point to hire. If adopted as proposed, they expressed concern that the current phrasing could undercut the purpose and reach of the law.

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As Rafael Espinal, executive director of the Freelancers Union and former councilmember of New York’s 37th district, put it bluntly: “the scope is so limited that it would make the local law practically useless.”

Another point of contention: The rules proposed a three-pronged test for machine learning. Merve Hickok, founder of and chair of the Center for AI and Digital Policy, told HR Brew that such a test undercut the intent of the law.

“It is extremely, extremely rare that you would use machine learning tools that have all those criteria,” Hickok said. By requiring the three-pronged test, lawmakers are, “excluding pretty much everything.”

Send it back. Over the course of the hearing, commentators had the same message: Get it right, because equitable hiring, as HR professionals know, is too important to blunder. Andrew Hamilton, the former president of a local chapter of the National Black MBA Association, has also been testifying in support of Local Law 144 since it was first proposed. He said he still supports it—but only if the DWCP hears the feedback brought forward on Monday.

“The implementation of Local 144 represents an incredible opportunity to differentiate between decision-making tools that were built with racial equity in mind [and] those [that] were not,” he said in Monday’s hearing. “As someone who was waiting to build this law for years, it’s my sincere hope that City Council’s important work is not stamped out.”

Brooks-Powers urged the agency to invest in the expertise it needed to cross the finish line, saying, “it would be a shame to squander [the] opportunity” provided by the law to create change.

In response to concerns, the DCWP’s Michael Lanza told HR Brew by email that the department is in the process of reviewing the public comments from the past two hearings and working “quickly” to implement a final rule—hopefully by the April deadline.

“A robust rulemaking process is essential,” Lanza wrote.—SV

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Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.