What is NYC Local Law 144?
NYC Local Law 144 (LL144) is the first municipal law in the United States to regulate the use of Automated Employment Decision Tools (AEDTs) in hiring and promotion. Enacted in December 2021 and enforced starting July 5, 2023, the law requires employers and employment agencies using AI in hiring to conduct annual bias audits and provide advance notice to candidates.
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 simplified output (score, classification, or recommendation) used to substantially assist or replace discretionary decision-making for employment decisions.
Examples: AI resume screening, automated video interview analysis, predictive hiring assessments, algorithmic candidate ranking, AI-powered skills testing.
The law applies to employers and employment agencies that use AEDTs to screen candidates or employees for hire or promotion in New York City. It covers both employers based in NYC and those outside NYC who hire NYC residents.
Source: NYC Department of Consumer and Worker Protection (DCWP),Local Law 144 Guidance
Who Must Comply?
Covered Entities
- •Employers with 4+ employees using AEDTs
- •Employment agencies using AEDTs
- •Companies hiring NYC residents (even if based elsewhere)
- •Companies using vendor-provided AEDTs
Common Misconceptions
- ✗"We're too small" - No exemption for small businesses
- ✗"Vendor handles compliance" - Employer is responsible
- ✗"Only for hiring" - Also covers promotions
- ✗"AI is just a tool" - Substantial assistance = covered
Compliance Requirements
1. Independent Bias Audit
Conduct an annual bias audit by an independent auditor to test for discriminatory impact on the basis of race/ethnicity and sex.
Auditor Requirements:
- No financial interest in employer or AEDT vendor
- Cannot be employee of employer or vendor
- Must have relevant expertise (statistics, employment law, AI)
Bias Metrics:
Must calculate selection rates and impact ratios for:
- •Sex: Male vs. Female
- •Race/Ethnicity: Per EEOC categories (White, Black/African American, Hispanic/Latino, Asian, Native American, Two or More Races)
- •Intersectional: Sex × Race/Ethnicity combinations
Impact Ratio Formula:
Impact Ratio = (Selection Rate for Category) / (Selection Rate for Most Favored Category)Impact ratio < 0.80 suggests disparate impact (EEOC's "four-fifths rule")
2. Public Summary Publication
Publish a summary of the bias audit results on your careers page or website.
What to Publish:
- Summary of bias audit results
- Impact ratios for all tested categories
- Date of audit
- Auditor information (name, firm)
- AEDT vendor information
Publication Requirements:
- •Must be on employer's careers page or website
- •Accessible to public without login
- •Available for at least 6 months after audit date
3. Candidate Notice
Provide advance notice to candidates and employees at least 10 business days before using an AEDT.
Notice Requirements:
- Timing: At least 10 business days before AEDT use
- Content: Must state that AEDT will be used
- Job title/role: Specify position being evaluated
- Data source: Explain what data will be collected/analyzed
Alternative Process:
Candidates and employees have the right to request an alternative selection process or accommodation.
Enforcement & Penalties
Penalty Structure
Example: Missing bias audit for 180 days = $90,000 to $270,000 exposure
Enforcement Authority
NYC Department of Consumer and Worker Protection (DCWP) enforces LL144 through:
- •Complaint-driven investigations
- •Proactive compliance audits
- •Monitoring of public job postings
- •Cross-referencing bias audit publications
Investigation Triggers
- Candidate complaint (most common)
- Missing public bias audit summary
- Employee whistleblower report
- Media coverage or viral complaints
- Industry-wide sector sweeps
Free Compliance Tools
Use these free tools to assess your LL144 compliance and calculate your risk exposure:
Law Finder
Check if NYC Local Law 144 applies to your company based on location, AI use, and company size.
Penalty Calculator
Calculate your potential penalty exposure for LL144 violations based on violation duration and company size.
Bias Detection
Analyze your job postings and hiring materials for bias indicators that could trigger LL144 violations.
Common Violations
1. No Bias Audit Conducted
Using AEDT without any bias audit. Often occurs when companies assume vendor's audit satisfies requirement (it doesn't).
Penalty: $500-$1,500 per day from first use
2. Missing Public Summary
Bias audit exists but not published on careers page. DCWP actively monitors for this.
Penalty: $500-$1,500 per day from enforcement start
3. Inadequate Candidate Notice
Notice timing violated (less than 10 days), vague language about AI's role, or no opt-out process offered.
Penalty: $500-$1,500 per day per affected candidate
4. Stale Bias Audit
Audit older than 12 months or doesn't reflect current AEDT version after material changes.
Penalty: Treated as "no audit" - full penalty exposure
Frequently Asked Questions
Does LL144 apply if I'm not based in NYC?
Yes, if you hire NYC residents. The law applies based on where candidates/employees are located, not where the employer is based. If you're a California company hiring a NYC resident, LL144 applies.
Can I use my vendor's bias audit?
No. The employer must commission their own independent bias audit. Vendor audits don't satisfy LL144 because they test the vendor's system in general, not your specific use case with your candidate pool.
What if my bias audit shows disparate impact?
You can still use the AEDT under LL144. Having disparate impact doesn't prohibit AEDT use—you must publish results (including disparate impact findings) and can continue using the tool. However, consider Title VII risk: disparate impact can trigger federal discrimination claims.
How do I find an independent auditor?
Look for auditors with statistical expertise, employment law knowledge, and AI/ML understanding. Sources include specialized bias audit firms ($15K-$50K), employment law firms with statisticians ($25K-$75K), academic researchers ($10K-$30K), or HR consulting firms ($20K-$60K). Red flags: auditor has ongoing advisory relationship with you, is affiliated with AEDT vendor, or has equity stake in vendor.
Do I need a new audit if I change vendors?
Yes, in most cases. New vendor = new AEDT with different algorithms and training data. Previous audit doesn't cover new system. New audit required when: switching vendors, upgrading to new model version, material changes to configuration, or adding new features. Plan 4-8 weeks for audit completion.