New York City's Local Law 144 regulates the use of automated employment decision tools (AEDTs) in hiring and promotion. If you use software to screen, rank, or score candidates for a job located in New York City, you must commission an independent bias audit within the prior year, publish a summary of the results, and notify candidates at least 10 business days before the tool is used. Enforcement began on July 5, 2023, and penalties run from $500 to $1,500 per violation, with each day of non-compliant use counting separately.
An automated employment decision tool (AEDT) is any computational process, built from machine learning, statistics, data analytics, or AI, that produces a simplified output such as a score, ranking, or recommendation, and that substantially assists or replaces human discretion in a hiring or promotion decision. The term comes from New York City's Local Law 144. Whether a specific tool qualifies depends on two things: how it works, and how much weight its output carries in the decision.
A bias audit under Local Law 144 is an independent statistical evaluation of an automated hiring tool. It measures how often the tool selects candidates from different demographic groups, then compares those rates using an impact ratio. The audit must be run by an independent party, must cover sex, race and ethnicity, and intersectional categories, and must be repeated every year. The output is a summary that employers publish so candidates can see how the tool performs before they apply.
The EU AI Act classifies AI used in recruitment, selection, and employment decisions as high-risk. That classification triggers a substantial set of obligations covering risk management, data governance, transparency, human oversight, and record-keeping. Article 10, the data governance provision, is one of the most demanding: it requires that the datasets behind a hiring tool be relevant, representative, and examined for bias. Companies deploying hiring AI in the EU need to prepare well before the high-risk obligations take effect.
Getting AI hiring tools compliant follows a repeatable sequence: inventory your stack, classify which tools are in scope, gather the right data, run an independent bias audit, publish the results, notify candidates, document your decisions, and set up ongoing monitoring. This checklist walks through each step in the order that avoids rework. Most companies can move from unclear to compliant in a matter of weeks when they follow the sequence rather than jumping to the audit first.
Non-compliance with AI hiring laws costs far more than the headline fine. Under NYC Local Law 144, penalties run from $500 to $1,500 and are counted per day and per candidate, so a single tool used through a busy quarter can generate a large, compounding total. The EU AI Act adds a tiered penalty structure with much higher ceilings. Layered on top are discrimination litigation, remediation costs, deal and procurement friction, and reputational damage that outlasts any single fine.
A bias audit tells you whether a hiring tool treats groups differently. It does not tell you why, or how to fix it. Remediation is a separate discipline. Real fixes come from understanding where bias enters the system: the data it learned from, the target it was trained to predict, the thresholds it applies, and the human decisions wrapped around it. Reducing bias durably means addressing those sources with evidence, not just re-running the audit and hoping the number improves.
When you buy an AI hiring tool, responsibility for compliance does not transfer to the vendor. Under NYC Local Law 144, the employer using the tool carries the obligations to audit, disclose, and notify. Under the EU AI Act, obligations are split between the provider that builds the tool and the deployer that uses it, with the heavier build-side duties on the provider and use-side duties on the employer. The costly misconception is assuming your vendor has handled compliance for you. In almost every case, meaningful responsibility stays with you.
Compliance with AI hiring laws is a state you maintain, not a certificate you earn once. Bias audits renew every year. New tools enter the hiring stack. Regulations evolve. A one-time project that gets you compliant today will quietly leave you non-compliant within a year unless it is backed by an ongoing governance program. That program has a small number of moving parts: a living tool inventory, an audit calendar, a review gate for new tools, a regulatory watch, and clear ownership. Set up well, it runs quietly in the background and prevents the annual scramble.
The complete executive guide to NYC Local Law 144. It walks through what the law is and who it applies to, what qualifies as an automated employment decision tool, the three obligations of audit, disclosure, and candidate notice, how a bias audit actually works, who carries responsibility when you buy software rather than build it, what non-compliance really costs once daily penalties are counted, the sequence that takes a company from unclear to compliant in a few weeks, and the ongoing governance that keeps you compliant year after year.