By: Ty Hyderally, Esq., Francine Foner, Esq., and Maya Patel

Employers utilizing artificial intelligence (AI) systems in their recruiting and hirings processes may encounter new regulations in New Jersey and New York. In 2024 thus far, 2 bills have been proposed in New Jersey and 1 bill in New York following New York City’s Local Law 144, which came into effect last July, setting guidelines for specific automated employment decision tools used by employers within the city.

Earlier this year, New Jersey introduced two AI regulation bills, A3845 and A3911. Bill A3845, introduced on February 22, 2024, by Assemblyman Herb Conaway Jr., aims to regulate “the use of automated employment decision tools during the hiring process” for the purpose of minimizing “employment discrimination that may result from the use of the tools.”  The proposed law would mandate strict regulations on the sale and usage of automated employment decision tools within the State of New Jersey. In addition, the bill stipulates that such tools cannot be sold unless they have undergone a recent bias audit, with the results provided to the purchaser annually at no extra cost. Further, the employment decision tool must be accompanied by a notice declaring its compliance with the bill’s provisions. In addition, employers using such tools for candidate screening must publicly share summaries of bias audits on their websites. The bill would also require that candidates screened using these tools be informed within 30 days of the tool’s usage, its assessment criteria, and be provided with information about the data collected and retention policies upon request. Individuals who breach any clause of this bill will face a civil penalty of up to $500 for their initial violation, and for each subsequent violation on the same day, up to a maximum of $1,500. Penalties will accrue daily for each automated employment decision tool sold or offered for sale in contravention of proposed law. If enacted, the provisions of this bill will become effective on the “first day of the third month” following its enactment.

Bill A3911, introduced on February 27, 2024, by Assemblywoman Victoria A. Flynn, aims to regulate the use of AI tools which analyze videos submitted by job applicants. Prior to requesting a video interview, employers must inform applicants of the potential AI analysis, provide details on how the technology functions and the characteristics it assesses, and obtain written consent from the applicant for AI evaluation. The proposed law would also prohibit employers from evaluating applicants who have not consented to AI analysis and from sharing videos, except with essential service providers. Further, upon request, employers must delete applicant videos within 30 days and instruct any recipients to do the same. Additionally, employers using AI for interview selection must collect and report demographic data on applicants considered for in-person interviews or hired, including race and ethnicity information. This data must be reported annually to the New Jersey Department of Labor and Workforce Development (NJDOL). Subsequently, the NJDOL will provide reports to the Governor and State Legislature, assessing whether the data reveals any instances of racial bias in AI utilization. Violators of any provision within this bill will face a civil penalty of $500 for a first offense and $1,000 for any subsequent offenses. If enacted, this bill will become effective immediately.

New York’s proposed bill A9314 was introduced by Assemblyman George Alvarez and hopes to prohibit employers from deploying automated employment decision tools that do not adhere to specific regulations. These regulations mandate annual disparate impact analyses to evaluate the tools’ actual effects on candidate selection within the state, with results provided to the employer privately. Before implementing such tools, employers must publicly share summaries of the most recent analysis on their websites. Additionally, employers must annually furnish the New York Department of Labor (NYDOL) with these summaries. The New York Attorney General and Commissioner are empowered to investigate if the “summary of the most recent disparate 30 impact analysis establishes a suspicion of a violation.” In addition, the New York Attorney General and Commissioner can initiate legal action in appropriate courts to enforce compliance or seek other necessary remedies. The bill, if enacted, would also authorize the NYDOL to establish rules and regulations to ensure the effective implementation of these provisions before the specified effective date. If enacted, this bill will take effect immediately.

The landscape of employment law in New Jersey and New York is poised for changes with the introduction of these bills targeting the use of artificial intelligence in the hiring process. These legislative efforts aim to mitigate employment discrimination arising from the utilization of automated employment decision tools.  If passed, these bills will mark a crucial step towards safeguarding employee rights and ensuring fair and transparent hiring practices in the ever-changing era of AI.

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