NYC Local Law 144: Automated Employment Decision Tools Compliance Guide

April 1, 2025

What is NYC Local Law 144?

NYC Local Law 144 is groundbreaking legislation that regulates the use of Automated Employment Decision Tools (AEDTs) in hiring and promotion processes. The law specifically targets employers and employment agencies operating in New York City who utilize automated tools to assist in making hiring decisions. As the first jurisdiction to implement a mandatory bias audit requirement, NYC is setting a precedent that will likely influence broader AI hiring compliance trends across the country.

Organizations that fail to comply with this law face significant consequences, including penalties of up to $1,500 per violation or $10,000 per week of continued violation. Beyond the financial impact, non-compliance can result in substantial reputational damage that may affect an organization's ability to attract top talent in a competitive market.

2025 Compliance Requirements

Annual Bias Audit of AEDTs

Before using any automated hiring tool, organizations must conduct an independent bias audit within the past year. This audit evaluates the tool for potential bias against protected groups, with a particular focus on race/ethnicity and sex categories. The process involves measuring selection rates across different demographic groups and calculating impact ratios to identify any disadvantaged populations.

While the law does not establish specific thresholds for acceptable results, it mandates that both the audit itself and the reporting of results are completed. This approach emphasizes transparency over prescriptive outcomes, allowing organizations to address any identified issues in a manner appropriate to their specific context.

Public Disclosure of Audit Results

Transparency is a cornerstone of Local Law 144. The latest bias audit results must be publicly available on the company's website without any barriers such as login requirements. This disclosure must include:

The date the audit was conducted
Details about the data used in the evaluation
Selection rates by demographic group
Impact ratios demonstrating comparative outcomes

This public accountability measure is designed to both hold employers responsible and inform candidates about the fairness of the automated tools being used to evaluate them.

Candidate Notification and Accommodations

The law requires that NYC resident candidates receive notification at least 10 business days before an AEDT is used in their evaluation process. This notification must clearly communicate that an automated tool will be used, explain the job qualifications or characteristics being assessed, and provide instructions for requesting an alternative assessment process or accommodations.

Organizations can fulfill this requirement through various channels, including job listings, email communications, or dedicated sections on their careers website. The key is ensuring that all candidates have adequate notice and understand their options.

Responsibility for Compliance

The legal responsibility for compliance with Local Law 144 rests primarily with the employer or employment agency using the automated tool. While vendors who provide these tools are not automatically responsible under the law, many have recognized the business advantage of helping their clients achieve compliance.

Many AEDT vendors now proactively conduct bias audits of their products and offer this as a selling point to potential customers. However, employers should exercise due diligence by verifying vendor claims about bias audits and ensuring they meet the specific requirements of the law.

Successful compliance typically requires a collaborative effort between employers and vendors, particularly in gathering necessary data and creating transparent documentation of the assessment process.

Step-by-Step Compliance Guide

1. Identify Your AEDTs and Check Applicability

Begin by creating a comprehensive inventory of all automated tools used in your hiring and promotion processes. Determine which of these qualify as AEDTs under the legal definition and confirm that the law applies to your organization's operations in New York City.

2. Plan the Bias Audit

Establish a regular annual cycle for conducting bias audits and select an independent auditor with relevant expertise in algorithmic assessment. The auditor must be completely independent from the development and operation of the tool to ensure objectivity. In some cases, vendors may commission audits of their products that can serve multiple clients, creating efficiency in the compliance process.

3. Gather Necessary Data

Collecting appropriate data is crucial for a meaningful bias audit. This typically includes historical data from past usage of the tool, including demographic information related to race, sex, and other protected categories. If sufficient real-world data is not available, carefully designed test data may be used as an alternative. Whatever approach is taken, it's important to thoroughly document the data source for transparency.

4. Conduct the Bias Audit

The core of compliance is the actual audit process, which evaluates the tool by measuring outcomes for different demographic groups. This involves calculating selection rates and impact ratios to identify any patterns of disadvantage. When sample sizes allow, examining intersectional categories can provide additional insights. The end result should be a comprehensive report summarizing the findings.

5. Review Results and Take Action

Once the audit is complete, organizations should bring together HR professionals and technical teams to analyze the findings. If significant bias is identified, consider implementing mitigation strategies to improve fairness. Document any changes made to the system and consider conducting an optional follow-up audit to measure the improvement.

6. Publish Bias Audit Summary

Create a dedicated public webpage to share the audit results, including:

The date the audit was conducted
Information about the data source used
Selection rates for different demographic groups
Impact ratios demonstrating comparative outcomes

This information must be accessible without requiring visitors to create accounts or log in. Remember to update the published results with each new annual audit.

7. Provide Notices to Candidates

Integrate appropriate notification into your recruitment process, ensuring that all candidates receive clear information about the use of automated tools. This notice should be prominently featured in job postings or application emails and must include contact information for accommodation requests. Maintain records of when and where these notices were provided to demonstrate compliance.

8. Maintain Ongoing Compliance

Compliance with NYC Local Law 144 is not a one-time project but an ongoing commitment. Make bias audits a recurring annual process and ensure that any new AI tools are properly audited before being implemented for NYC candidates. Stay informed about regulatory updates and emerging laws in this rapidly evolving field. Beyond mere compliance, work to foster a culture of responsible AI use throughout your HR processes.

Fairly AI: Compliance Partner

How Fairly AI Helps

Fairly AI is your independent, external auditor for automated hiring and employee evaluation tools. Our “AI-Compliance-in-a-Box” solution streamlines the NYC Local Law 144 audit process for organizations of all sizes. We identify potential sources of bias using automated pre-scan tools, then conduct a thorough, regulator-aligned bias audit. Our approach bridges the gap between technical systems and legal requirements—so you can stay compliant, build trust, and accelerate sales.

Proven Experience

The company has supported multiple bias audits ranging from startups to enterprises in highly regulated industries. Their credibility is enhanced by collaborations with respected standards organizations such as the Standards Council of Canada (SCC) and the British Standards Institution (BSI).

Service Options

Fairly AI provides flexible options to meet diverse organizational needs:

Fast, affordable option designed for HR Tech vendors
Enterprise-grade solutions for larger organizations with secure data requirements
Continuously updated services to address new regulations as they emerge

Conclusion

NYC Local Law 144 represents a significant trend toward greater transparency and fairness in hiring processes. While compliance requires careful planning and execution, it ultimately builds more trustworthy hiring processes that can attract top talent in a competitive market.

Many organizations have already successfully completed audits with positive outcomes, demonstrating that compliance is achievable with the right approach and resources. Beyond mere legal compliance, ethical use of automated employment decision tools demonstrates leadership and commitment to fairness—values that resonate with both candidates and the broader market.

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