NYC Local Law 144: Complete Employer Compliance Guide

New York City Local Law 144 was one of the first laws in the United States to specifically regulate AI in hiring. If you use automated tools to screen candidates or employees in NYC, this law imposes strict bias audit and disclosure requirements that are already in effect.

Key Facts

• Effective Date: July 5, 2023 (already in effect)
• Enforced By: NYC Department of Consumer and Worker Protection (DCWP)
• Applies To: Employers and employment agencies using AEDTs in NYC
• Penalties: $500-$1,500 per violation

What is an AEDT?

An Automated Employment Decision Tool (AEDT) is any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues a simplified output (score, classification, recommendation) to substantially assist or replace discretionary decision-making for employment decisions.

Examples of AEDTs

• Resume screening software that ranks or scores candidates
• Video interview platforms that analyze responses, tone, or expressions
• Chatbots that screen candidates and make advancement recommendations
• Skills assessment tools with AI-powered scoring
• ATS features that automatically filter or prioritize applications

What's NOT an AEDT

• Simple keyword searches without machine learning
• Basic yes/no eligibility filters (e.g., work authorization)
• Calendar scheduling tools
• Communication platforms without analytical features

Requirements Overview

1. Independent Bias Audit

Before using an AEDT, you must have it audited by an independent auditor. The audit must:

• Be conducted within the past year (audits must be annual)
• Analyze the AEDT's selection or scoring rates by sex, race/ethnicity categories
• Calculate impact ratios comparing outcomes across demographic groups
• Be conducted by an entity that exercises objective, impartial judgment

2. Public Disclosure (Website Posting)

You must publish a summary of the bias audit on your website. The summary must include:

• The date of the most recent bias audit
• The distribution date of the AEDT (when it was provided to you)
• The selection rates and impact ratios for all categories
• For each category, the number of individuals assessed

3. Candidate Notice

You must notify candidates residing in NYC at least 10 business days before the AEDT is used on them. The notice must include:

• That an AEDT will be used
• What job qualifications and characteristics the AEDT will assess
• Information about the data sources (what data the AEDT uses)
• Instructions for requesting an alternative selection process or accommodation (if available)

Notice Delivery Methods

The notice can be provided via:

• Email or written correspondence
• The job posting itself
• A conspicuous and clear link in the job posting

Bias Audit Requirements in Detail

What Must Be Tested

The audit must calculate impact ratios for:

• Sex categories: Male, Female, Unknown
• Race/Ethnicity categories: Hispanic/Latino, White, Black/African American, Native Hawaiian/Pacific Islander, Asian, Native American/Alaska Native, Two or More Races
• Intersectional categories: Sex combined with race/ethnicity

Impact Ratio Calculation

For each category, the impact ratio is calculated as:

A ratio below 0.8 (the "four-fifths rule") may indicate adverse impact, though the law doesn't specify a threshold. You should monitor low ratios and document explanations.

Who Can Conduct Audits?

The auditor must be independent — meaning they exercise objective, impartial judgment on all issues within their scope. Your AEDT vendor cannot audit their own tool. Many employers use third-party firms specializing in algorithmic auditing or employment testing validation.

Step-by-Step Compliance Checklist

Initial Setup (Before Using AEDT)

• ☐ Identify all AEDTs used in hiring NYC candidates
• ☐ Contact vendors to obtain bias audit (or commission independent audit)
• ☐ Review audit results for adverse impact indicators
• ☐ Create public summary document from audit results
• ☐ Post summary on career site/company website
• ☐ Create candidate notification language
• ☐ Integrate notice into application process

Ongoing Compliance

• ☐ Provide notice to all NYC candidates 10+ business days before AEDT use
• ☐ Track that notices were delivered
• ☐ Conduct new bias audit annually
• ☐ Update public summary after each audit
• ☐ Re-audit if AEDT is significantly modified
• ☐ Monitor for enforcement updates from DCWP

Sample Candidate Notice

Penalties and Enforcement

The NYC Department of Consumer and Worker Protection (DCWP) enforces Local Law 144:

• First violation: $500 civil penalty
• Subsequent violations: $500-$1,500 per violation
• Each day of use without a bias audit counts as a separate violation
• Each candidate not notified counts as a separate violation

Frequently Asked Questions

Does this apply to remote positions?

If you're evaluating candidates who reside in NYC, or for positions based in NYC, the law likely applies. The safest approach is to comply for any role that might attract NYC applicants.

Can my vendor provide the bias audit?

The vendor cannot audit their own tool. However, many vendors work with third-party auditors and can provide audit results. Review the audit to ensure it meets NYC requirements and was conducted by an independent party.

What if my AEDT shows adverse impact?

The law doesn't prohibit using an AEDT with adverse impact — it requires transparency. However, adverse impact may create liability under other employment discrimination laws. Consider working with your vendor to improve the tool or implementing additional safeguards.

Do I need a new audit every year?

Yes. The bias audit must have been conducted within one year of using the AEDT. Set a calendar reminder to commission a new audit before your current one expires.

What's the penalty for not providing the required 10-day notice?

The NYC Department of Consumer and Worker Protection (DCWP) can impose civil penalties of $500 for first violations and up to $1,500 for subsequent violations, assessed per affected candidate. For high-volume hiring, this adds up fast: if you screen 1,000 NYC candidates without proper notice, you're looking at $500,000 minimum exposure. In addition to fines, DCWP can require corrective action (retroactive notices, process changes) and publish enforcement actions, creating reputational risk. Private lawsuits are also possible under general employment discrimination statutes if the AEDT produces discriminatory outcomes and you failed to follow LL144's bias audit requirements.

If our AEDT is only used by one person in our HR team, do we still need to comply?

Yes. LL144 applies to any use of AEDTs in hiring, regardless of how many employees use the tool. Even if only your TA Director uses an AI resume screening tool, full compliance (bias audit, disclosure, public posting) is required. The law focuses on the impact on candidates, not your internal staffing. A common misconception is that "limited use" exempts employers—it doesn't.

Can we satisfy the disclosure requirement by including LL144 language in our general privacy policy?

No. The law requires that candidates be notified "at least ten business days before use of the AEDT." Burying this in a privacy policy that candidates might read months before (or after) the AEDT is used doesn't meet the timing requirement. You must provide specific, timely notice tied to when the AEDT will actually be applied to their candidacy. Best practice: send a dedicated disclosure email when scheduling AI-powered assessments or before applying AI screening tools to their application. Document the delivery date to prove 10-day compliance. See our disclosure templates for compliant notice examples.

Related Resources

• NYC Compliance Page
• What Counts as AI in Hiring?
• Vendor Assessment Guide
• AI Disclosure Notice Template
• Free Compliance Scorecard