What Is NYC Local Law 144?
New York City Local Law 144 is one of the first laws in the United States to directly regulate how artificial intelligence is used in hiring. Officially titled the law governing Automated Employment Decision Tools (AEDT), it went into effect on January 1, 2023, with enforcement beginning on July 5, 2023.
The law applies to any employer or employment agency that uses an AI-powered tool to screen candidates or make employment decisions for jobs based in New York City. If your company uses software that scores, ranks, or filters job applicants — and any of those roles are located in NYC — this law applies to you.
Why This Law Matters
AI hiring tools have become widespread. Resume screeners, video interview analyzers, chatbot pre-screeners, and algorithmic candidate ranking systems are used by thousands of companies. However, research has repeatedly shown that these tools can embed and amplify bias against protected groups based on race, gender, ethnicity, and disability status.
Local Law 144 was enacted to address this gap. It is enforced by the NYC Department of Consumer and Worker Protection (DCWP), which has the authority to investigate complaints and issue fines.
Who Must Comply
The law applies to employers and employment agencies that:
- Use an AEDT to substantially assist or replace discretionary decision-making in hiring or promotion
- Are hiring for positions located in New York City
- Includes both NYC-based companies and out-of-state employers hiring for NYC roles
What qualifies as an AEDT? Any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output (score, classification, or recommendation) used to substantially assist or replace discretionary decision-making in employment.
Key Exemptions
- Tools that do not substantially assist or replace human decision-making
- Tools used solely for matching candidates to open positions without scoring or ranking
- Junk email or spam filters applied to job applications
Core Compliance Requirements
1. Annual Bias Audit
Employers must have an independent bias audit conducted on any AEDT before its use and no more than one year before the date it is used. The audit must:
- Be performed by an independent auditor (not the vendor that created the tool)
- Calculate the selection rate and impact ratio for each category (race/ethnicity and sex)
- Evaluate the tool as used by the employer, not just in a generic context
- Be updated at least annually
The audit must produce results showing:
- Selection rates for each demographic group
- Impact ratios comparing selection rates of each group to the most-selected group
- Whether the tool produces statistically significant disparities
2. Public Disclosure
The results of the most recent bias audit must be publicly posted on the employer's website before using the AEDT. This includes:
- The date of the audit
- The distribution date of the AEDT (when it was most recently used)
- The source and explanation of data used for the audit
- The number of individuals assessed by the AEDT, broken down by category
3. Candidate Notification
Employers must provide notice to candidates at least 10 business days before an AEDT is used:
- That an AEDT will be used in the assessment
- The job qualifications and characteristics that the AEDT will evaluate
- Information about the type of data collected and the data retention policy
- Instructions for how to request an alternative selection process or accommodation
This notice can be provided via the job posting, the employer's careers page, email, or U.S. mail.
Penalties for Non-Compliance
The NYC DCWP can impose civil penalties:
| Violation | Penalty |
|---|---|
| First violation | $500 |
| Subsequent violations (same day) | $500 each |
| Additional violations after first | $500 - $1,500 per violation |
Each day an AEDT is used in violation of the law constitutes a separate violation. Each candidate who does not receive proper notice is a separate violation. This means penalties can escalate rapidly for companies with high-volume hiring.
How to Comply: Practical Steps
Step 1: Inventory Your AI Hiring Tools
Audit every tool in your hiring pipeline. This includes:
- Resume screening software
- Video interview analysis platforms
- Chatbot-based candidate pre-screening
- Algorithmic candidate scoring or ranking systems
- Any tool that produces a score, classification, or recommendation
Step 2: Determine If Each Tool Is an AEDT
Apply the legal definition. Does the tool use machine learning, statistical modeling, or AI to produce a simplified output that substantially assists or replaces discretionary decision-making? If yes, it is an AEDT.
Step 3: Engage an Independent Auditor
Hire an independent third-party auditor who has no financial interest in the tool being audited. The auditor should:
- Have expertise in algorithmic bias testing
- Follow the specific methodology outlined in the DCWP's final rules
- Be prepared to analyze data broken down by race/ethnicity and sex intersectional categories
Step 4: Publish Audit Results
Post the bias audit summary on your website in a location that is publicly accessible. Many companies create a dedicated "AI Hiring Transparency" page.
Step 5: Update Candidate Notices
Revise your job postings, career site, and candidate communications to include the required disclosures. Include the notice in your applicant tracking system's automated emails.
Step 6: Establish an Annual Review Cycle
Schedule your next audit well in advance. Do not wait until the last minute — audits can take 4-8 weeks depending on the complexity of the tool and the data available.
Recent Developments and Enforcement Trends
Since enforcement began in July 2023, the DCWP has been actively investigating complaints and conducting enforcement sweeps. Key trends include:
- Increasing scrutiny of vendor-provided audits: Regulators are looking more closely at whether audits are truly independent
- Focus on intersectional analysis: The final rules require analysis across intersectional categories (e.g., Black women, Hispanic men), not just single-category breakdowns
- Growing attention from plaintiffs' attorneys: Several law firms are monitoring compliance and encouraging candidates to file complaints
- Multi-state impact: NYC's law is influencing similar legislation in other jurisdictions, including Illinois, Colorado, and at the federal level
Common Mistakes to Avoid
- Relying solely on the vendor's built-in bias report — The law requires an independent audit, not a vendor self-assessment
- Providing notice too late — The 10 business day requirement is strict. Sending notice on the day of the assessment does not comply
- Not updating audits annually — An audit older than one year makes your AEDT use non-compliant
- Ignoring the law because you're based outside NYC — If the job is in NYC, the law applies regardless of where your company is headquartered
- Not offering alternative processes — The notice must explain how candidates can request an alternative assessment
Related Regulations
Employers dealing with AI hiring compliance should also be aware of:
- Illinois HB 3773: Prohibits AI-based employment discrimination under the Illinois Human Rights Act
- Colorado AI Act (SB24-205): Broader AI governance law covering employment and other high-risk uses (effective June 2026)
- EU AI Act: Classifies AI systems used in employment and worker management as "high-risk"
- EEOC Guidance on AI in Hiring: Federal guidance on how Title VII applies to algorithmic decision-making
Frequently Asked Questions
Yes. The law applies to any employer or employment agency that uses an AEDT for hiring or promotion decisions for jobs located in New York City, regardless of where the company is headquartered. If you are hiring for NYC-based roles, you must comply.
An AEDT is any computational process derived from machine learning, statistical modeling, data analytics, or AI that issues a simplified output — such as a score, classification, or recommendation — used to substantially assist or replace discretionary decision-making in hiring or promotion.
The bias audit must be conducted at least once per year. The audit must have been completed no more than one year before the date the AEDT is used. Companies should plan audits well in advance since they can take 4-8 weeks to complete.
No. The bias audit must be conducted by an independent auditor who does not have a financial interest in the tool being audited. Using the vendor that created the tool would not satisfy the independence requirement.
Penalties range from $500 for a first violation to $500-$1,500 for each subsequent violation. Each day the AEDT is used in violation and each candidate who does not receive proper notice counts as a separate violation, so fines can accumulate quickly.
Yes. Employers must notify candidates at least 10 business days before an AEDT is used. The notice must explain what the tool evaluates, what data is collected, how data is retained, and how to request an alternative selection process.
The summary of the most recent bias audit must be publicly posted on the employer's website before the AEDT is used. Many companies create a dedicated transparency page for this purpose.
References
- Local Law 144 of 2021 — Automated Employment Decision Tools. New York City Council (2021). View source
- Automated Employment Decision Tools: Final Rule. NYC Department of Consumer and Worker Protection (2023). View source
- The Impact of Artificial Intelligence on the Labour Market. OECD (2023)