With New York’s express adoption of a disparate impact standard under the New York State Human Rights Law, employers need to take proactive steps to evaluate whether neutral employment practices may be producing unintended discriminatory outcomes.
- Identify risk areas
Employers need to review where key employment decisions are made and note which policies or practices might screen people out. Pay particular attention to rules that are strict, automatic or heavily standardized, since those can have unintentional effects on certain groups.
- Organize basic data
Keep records that show how different groups are moving through your processes, such as who applies, who advances, and who is selected. Make sure the data is handled consistently and securely.
- Compare outcomes periodically
Employers need to analyze selection and advancement rates across protected groups at key decision points. Comparing outcomes can help identify patterns that may warrant further review.
- Revisit rules that raise concerns
When a rule or practice appears to be creating uneven outcomes, step back and ask whether it is truly necessary and closely tied to job needs. Consider whether there are less restrictive ways to achieve the same goal that would put fewer barriers in front of affected groups.
- Review the Use of AI and Third-Party Tools
Employers relying on automated decision-making tools or third-party vendors can not assume compliance. The employers need to have the ability to access relevant data and allow discontinuation of tools that might cause biased results.
- Update Policies, Training, and Documentation
Policies can be reviewed and updated to reflect New York’s explicit recognition of disparate impact liability and to reinforce the importance of job-related, consistently applied criteria. Training HR professionals, recruiters, and managers can address how disparate impact arises, when concerns need to be escalated, and the role of documentation in supporting employment decisions.
Although the law does not mandate a specific audit methodology, it places greater emphasis on employers’ ability to identify, justify, and modify practices that disproportionately affect protected groups.
Disparate Impact
The amendment to the New York State Human Rights Law prompts employers to take a closer look at their use of Artificial Intelligence (AI) and automated decision-making in hiring and other employment practices.
Because the law now expressly allows discrimination claims to be based on a practice’s discriminatory effect, employers may face liability for outcomes produced by AI-driven tools even where the employer did not design the algorithm with discriminatory intent or was unaware of how the tool weights certain factors.
Many AI hiring systems rely on historical data, proxies for job qualifications, or automated scoring and ranking mechanisms that can unintentionally disadvantage protected groups. Under the codified disparate impact standard, the focus is on the results generated by these systems rather than the employer’s motives or reliance on a third-party vendor. As a result, employers remain legally responsible for employment decisions influenced by AI. Algorithmic tools are subject to the same scrutiny as traditional screening methods under New York law.
This development echoes themes we discussed in our prior article, “How Will California’s New AI Hiring Laws Change Your HR Practices?” which outlines what HR teams need to know about regulating automated decision-making tools, including the importance of ensuring that anti-discriminatory standards in recruiting do not result in unequal treatment.