Algorithms and AI systems running on them have also found ways to recruiters, but New York City is geared to fight it with the anti-bias law in effect against hiring algorithms.
After facing several delays, the legislation is now in effect, making it mandatory for employers using algorithms for recruitment, hiring, or promotions to undergo independent audits and disclose the results to the public. This pioneering law is the first in the United States and aims to ensure transparency and fairness in the hiring process.
Under Local Law 144, companies must disclose the algorithms they employ and provide an ‘average score’ that candidates of different races, ethnicities, and genders are likely to receive. This score can be presented as a score, classification, or recommendation.
Additionally, the law demands the inclusion of ‘impact ratios,’ which measure the average algorithm-generated score of individuals in a specific category divided by the average score of individuals in the highest-scoring category, reported Techcrunch.
Non-compliant companies will face penalties, starting at $375 for the first violation and escalating to $1,500 for subsequent violations. Each day a company uses an algorithm in noncompliance or fails to provide sufficient disclosure will be considered a separate violation.
One of the driving forces behind the legislation is the recognition of bias in hiring algorithms. Incidents such as Amazon’s abandoned recruiting engine in 2018, which exhibited discrimination against women candidates, and a 2019 academic study highlighting AI-enabled anti-Black bias in recruiting, have shed light on the need for regulations in this area.
Another study by the University of Cambridge in October 2022 showed the extent of AI biases in recruitment. The study found that AI companies that claim to offer objective and meritocratic assessments are false, and the measures to remove gender and race bias proved to be ineffective.
Even with all the risks, companies are not slowing down the adoption of AIs in recruitment. A February 2022 survey by the Society of Human Resouce Management recorded that one in four organisations already leverages AI in their hiring process. The employers with more than 5,000 employees, this percentage is even higher.
Some of the most common AI tools companies use are text analysers that help sort resumes and cover letters based on keywords. Another not so common AI tools are chatbots that conduct online interviews to screen out applicants and interviewing software that predicts the candidate’s problem-solving skills and aptitudes. This software also predicts candidates’ cultural fit based on their speech patterns and facial expressions.
Some critics argue that the law does not go far enough. The New York branch of the American Civil Liberties Union (NYCLU) asserts that it falls short of adequately safeguarding candidates and workers. Concerns have been raised about potential exclusions, such as tools that transcribe text from video and audio interviews, which could lead to ongoing biases in the hiring process.
While the law may be imperfect, it does safeguard the interests of the candidates to some extent, as it does require that independent entities conduct the audits. Independent entities are those institutions that aren’t involved in using, developing or distributing the recruiting algorithm they are currently testing.
Implementing Local Law 144 has garnered attention and is likely to influence future legislation on algorithmic bias in hiring. Other jurisdictions, such as Washington, D.C., California, and New Jersey, are already considering similar measures to regulate AI in hiring. The success or failure of New York City’s law will serve as a litmus test for the efficacy of such regulations and may shape the future of fair hiring practices nationwide.