New York City businesses are pushing back hard against a draconian new law regulating the use of artificial intelligence software.

At issue is a type of AI software known as an automatic employment decision tool, or AEDT. These tools help hiring employers weed out good candidates from bad ones.

The problem is a new law passed in 2021 that goes into effect Wednesday. According to NBC News, the law says that any AEDT used by an employer must first be screened by a third party to make sure it is free of racist and sexist bias. Once the audit is complete, the employer must then publish the results of the audit.

But there’s more.

“The new regulations are enforced by New York City’s Department of Consumer and Worker Protection (DCWP), which explains on its website the audits on AEDT tools must be conducted at least once a year and ‘[a]t a minimum, an independent auditor’s evaluation must include calculations of selection or scoring rates and the impact ratio across sex categories, race/ethnicity categories, and intersectional categories,” according to Fox Business Network.

The NYC Dept. of Consumer & Worker Protection issued its Final Rules stating that any AEDT tool used must be subjected to a bias audit & #employees & job candidates must be informed when AEDT is being used. For more info., contact Kessler Matura at 1-888-831-8615 #nycjobs #emplaw pic.twitter.com/6wp5heSEw0

— Kessler Matura P.C. (@kesslermatura) April 25, 2023

Any company that fails to meet these requirements would be fined $500 the first time and up to $1,500 for each additional violation.

“The DCWP instructs anyone seeking to file a complaint of a potential violation of the new AI hiring tool regulations to visit the department’s website or call 311, and claims of discrimination involving AEDT’s should be directed to the NYC Commission on Human Rights,” FBN notes.

Speaking with the network, Job Creators Network president and CEO Alfredo Ortiz expressed great concern about the new law.

“This is just another top-down burdensome regulation that threatens to expose businesses to frivolous lawsuits based on manufactured racism concerns,” he said.

“Nobody wants racism or sexism in the hiring process, but analyzing automated hiring processes for racial or sexual disparities will result in trumped-up findings of business discrimination where none occurred. New York’s City Council should repeal such big government actions that reduce entrepreneurship to meaningfully help minorities improve their economic opportunity.”

#NYC’s Local Law 144 marks a huge step toward addressing bias and promoting transparency in #AI-powered decision-making.

BUT the #law‘s limits and need for industry self-regulation highlight the challenge of balancing #tech advancements with #ethical considerations. pic.twitter.com/hDPtAtNzaE

— Hexabit (@Hexabitofficial) July 6, 2023

In a statement, the Society for Human Resource Management (SHRM) also blasted the law.

“SHRM is committed to improving opportunity and equity in the hiring process, performance management and other areas of HR – and that includes the employment of any emerging technology. We agree that guardrails for AI are necessary; however, we do not support overregulation at the cost of workforce innovation and optimization,” the group said.

Are these concerns valid? Probably, given as “[c]ompanies are increasingly using automated tools in their hiring processes,” according to NBC News.

“Cathy O’Neil, the CEO of Orcaa, a consulting firm that has been running audits of hiring tools for companies that want to be in good standing with New York’s new law, said the rise in tools that automatically judge job candidates has become necessary because job seekers are also using tools that send out huge numbers of applications,” NBC News notes.

“In the age of the internet, it’s a lot easier to apply for a job. And there are tools for candidates to streamline that process. Like ‘give us your resume and we will apply to 400 jobs. They get just too many applications. They have to cull the list somehow, so these algorithms do that for them,” he said in his own words.

Despite these complaints, supporters of the law are in fact demanding more. Take Julia Stoyanovich, a computer science professor at New York University who says the law is a good start but still too limited.

“First of all, I’m really glad the law is on the books, that there are rules now and we’re going to start enforcing them. But there are also lots of gaps. So, for example, the bias audit is very limited in terms of categories. We don’t look at age-based discrimination, for example, which in hiring is a huge deal, or disabilities,” she said.

A bit of a strange collage of utterances, but, yeah, we need #AIRegulation to control the actual, real, immediate threats of the irresponsible use of AI. Worrying about some sci-fi future risks draws attention away from the real issues #ResponsibleAI https://t.co/WH9E9KYtQa

— Julia Stoyanovich (@stoyanoj) June 1, 2023

Supporters of the law are reportedly also concerned about how it’ll be enforced.

“New York’s Department of Consumer and Worker Protection, charged with enforcing the law, ‘will collect and investigate complaints’ of companies accused of violating it, an agency spokesperson said,” NBC News notes.

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Vivek Saxena

Senior Staff Writer
Vivek@bizpacreview.com

V. Saxena is a staff writer for BizPac Review with a decade of experience as a professional writer, and a lifetime of experience as an avid news junkie. He holds a degree in computer technology from Purdue University.

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