Almost Everyone Is Ignoring NYC’s AI Hiring Law

For a little over six months, New York City has been on the cutting edge of AI regulation. During this short time period, the city has a law requiring companies to disclose how algorithms affect hiring decisions.  

According to a recent report published by The Wall Street Journal, the pioneering AI-related regulation, also known as Local Law 144, targets the use of AI and automated tools in recruitment and promotion processes. However, it’s been reported that despite its good intentions, compliance has been relatively lackluster — with only 18 companies in a recent Cornell University study found to be adhering to the city’s mandate. 

Local Law 144 was developed to mitigate the potential for unintended biases found in employment decisions by AI-related technology. The law requires annual audits for potential race and gender biases within hiring tools including chatbots and resume scanners, and it requires publishing the results onto company websites.  

The Cornell University study was analyzed by The Wall Street Journal, and it highlights a worrying trend: Out of nearly 400 companies operating within NYC, only 18 have posted the information required by the regulation. This includes notable companies like Morgan Stanley, Pfizer, Cigna, and Paramount. However, most companies examined in the study did not disclose information.    

As AI and automation become increasingly prevalent in hiring practices, the need for greater transparency and accountability when using AI-related tools also grows. The city’s law could be a forerunner for similar regulations to be established by policy makers in the U.S., and in the European Union, but NYC’s law faces challenges such as ambiguous definitions and enforcement based on complaints — factors cited as contributing to the low compliance rates within the city. 

The study suggests that AI-policies can encourage fairer hiring practices by addressing inherent biases in AI systems, but it also presents issues for employers in adapting to these new norms. For technology providers, it also creates new challenges in ensuring their tools comply with diverse legal standards. Policies and guardrails are still in the early stages of development. It’s possible that future regulations and requirements in NYC may be different from the regulations and requirements in other cities, such as Los Angeles. Which further complicates how tech providers should plan.  

As the world watches how AI-related policies affect the workforce, it’s clear that the conversation around AI in hiring is only just beginning. AI technology is positioned to be at the forefront of technological investment and regulatory oversight, with an increasing scrutiny of AI-related tools and programs in workplace settings.