The city and state governments of New York each recently passed laws to protect employee privacy – one law addressing use of automated decision-making tools in job interviews and promotions, and the other addressing electronic monitoring of employee communications.
Automated decision tools in hiring
New York City passed legislation to address the use of automated decision tools in hiring and promotion decisions. Starting January 2, 2023, the law will require employers or employment agencies in New York City to complete a bias audit before using an automated employment decision tool to screen job candidates or evaluate employees for promotions.
This law is part of a growing effort to prevent bias when using automated employment decision tools. Similar legislation has been passed in Illinois and Maryland, where employers that rely on artificial intelligence or facial recognition technology to analyze a job applicant's video interview are required to first provide notice and obtain consent. In addition, the US Equal Employment Opportunity Commission launched an initiative in October 2021 to gather information about the use and impact of employment-related technologies and issue technical guidance on algorithmic fairness.
What is an automated employment decision tool?
Under the new law, a tool will be classified as an "automated employment decision tool" if a computational process – derived from machine learning, statistical monitoring, data analytics or artificial intelligence – issues a score, classification or recommendation that is used to either substantially assist or replace discretionary decision-making in hiring decisions. In practice, this likely will apply to any software or algorithm used to screen and sort job candidates and employees, including those used to select résumés, sort skills, rank applicants or evaluate any other objective applicant characteristic. It will also apply to employee productivity and performance assessment tools, monitoring software, and compensation-analysis platforms.
What do employers and employment agencies need to do?
The law imposes certain notice obligations when dealing with job candidates and employees who reside in New York City. At least 10 business days before the tool is used, candidates or employees must be notified of the following:
- An automated employment decision tool is being used as part of the evaluation, and the candidate or employee has the right to request an alternative selection process or accommodation.
- The tool will reference a specified list of job qualifications and characteristics in assessing the candidate or employee.
- Within 30 days of a candidate's or employee's written request, an employer or agency must provide information about the types of data collected for the tool, the source of the data and the data retention policy. Alternatively, this information may be posted on the employer's or agency's website.
In addition, employers must arrange for an independent bias audit of any automated employment decision tool no more than one year prior to the use of the tool to assess the tool's disparate impact on individuals in any federal EEO-1 "Component 1 category" (i.e., whether the tool would have a disparate impact on individuals based on their race, ethnicity or sex). A summary of the most recent audit, as well as the distribution date of the tool to which the audit applies, must be available on the employer's or agency's website prior to use.
What are the penalties for violating the law?
The first violation will result in a civil penalty of no more than $500. Each use of the tool on the same day as the first violation will be treated as a new violation with a penalty of no more than $500. All subsequent violations have a civil penalty of at least $500 and no more than $1,500. Each day the tool is used in violation of the law is treated as a separate violation.
Additionally, each failure to provide any of the three notice requirements will be treated as a separate violation.
Employee electronic monitoring
The state of New York passed legislation to address the electronic monitoring of employee communications. Starting May 7, 2022, the law will require employers with a place of business in New York state who engage in electronic monitoring of employee communications to notify employees of such monitoring.
What forms of communication does it apply to?
The law covers the monitoring of employees' telephone communications, email, or internet access or usage by any electronic device or system. The law does not apply to monitoring that is solely for the purpose of maintenance or protection.
What do employers need to do?
Employers must provide prior written notice of such monitoring upon hiring of any employee. The notice must explain that all phone conversations or transmissions, email or transmissions, or internet access or usage by an employee through any electronic device or system is monitored. The written notice should be in an electronic form and acknowledged by the employee in writing or electronically. Additionally, the notice must be posted in a prominent and viewable area.
What are the penalties for violating the law?
Employers will receive a civil penalty of $500 for a first-time violation. Subsequent violations will result in higher penalties: $1,000 for a second violation and $3,000 for a third violation.
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