Understanding New York’s AI Regulations

 Artificial intelligence (AI) is revolutionizing industries, from healthcare and finance to hiring and consumer protection. However, with rapid adoption comes the need for regulatory oversight to ensure fairness, transparency, and accountability.

New York has emerged as a leader in AI regulation, particularly in employment decisions and state agency AI usage. If your business operates in New York or utilizes AI-driven tools, staying compliant with new and proposed AI laws is critical.

In this post, we’ll break down the latest AI regulations in New York, how they impact businesses, and what’s on the horizon.

One of the most talked-about AI regulations in New York is NYC Local Law 144, which governs the use of AI-driven hiring tools, officially known as Automated Employment Decision Tools (AEDTs).

AEDTs are AI-powered tools that assess job applicants based on resumes, assessments, or other data-driven evaluations. The law aims to eliminate algorithmic bias and promote fairness in hiring.

• Mandatory Bias Audits: Employers using AEDTs must conduct an independent bias audit annually to ensure AI-driven hiring does not disproportionately impact candidates based on race, ethnicity, or sex.
• Public Disclosure: Companies must publish a summary of their most recent bias audit results on their website, including audit dates and data sources.
• Candidate Notification: Job applicants must be informed at least 10 business days in advance if an AI tool will be used in their hiring process.
• Alternative Screening Methods: While applicants can request an alternative evaluation method, the law does not explicitly grant them the right to opt-out of AI screening entirely.
• Enforcement & Penalties: The NYC Department of Consumer and Worker Protection (DCWP) enforces compliance, with penalties reaching $1,500 per violation.

What It Means for Businesses

• HR departments must adjust hiring practices to ensure compliance.
• Bias audits must be conducted annually, increasing operational costs.
• Companies using third-party AI tools must verify vendor compliance.
• Potential lawsuits could arise if an AI system is found to be discriminatory.

Key Takeaway: If your company uses AI in hiring, compliance isn’t optional—failing to meet these requirements could result in legal and financial penalties.

Beyond NYC, New York State is actively exploring broader AI regulations to govern AI bias, privacy, and security.

A legislative AI task force is expected to provide recommendations on AI governance by late 2024, potentially leading to statewide AI regulations.

Proposed AI Regulations in the State Legislature

• Assembly Bill A768 (2025): The New York Artificial Intelligence Consumer Protection Act seeks to prevent algorithmic discrimination in decision-making.
• Senate Bill S1169 (2025): Aims to regulate AI risk assessments and bias audits for high-risk AI applications.
• Current Status: These bills are still under legislative review and have not yet been enacted into law.

Key Takeaway: If these laws pass, AI regulations in New York could expand beyond hiring to include finance, healthcare, education, and more.

In December 2024, New York Governor Kathy Hochul signed a law requiring all state agencies to assess their use of AI-driven software.

• Government AI Audits: State agencies must evaluate AI tools for potential bias and ensure transparency.
• Banning High-Risk AI Decisions: AI systems cannot make critical decisions—such as eligibility for government services—without human oversight.
• Statewide AI Restrictions: The governor banned DeepSeek AI from government devices, citing concerns about foreign surveillance and censorship risks.
• Key Takeaway: New York is taking a proactive approach to AI accountability in public institutions, setting a precedent for private sector regulations in the future.

What Businesses Should Do Now:

• Conduct annual AI bias audits if using AI-driven hiring tools.
• Stay informed on pending AI legislation in New York.
• Work with AI vendors that align with compliance requirements.
• Ensure AI-driven decisions can be explained and justified.

Looking Ahead: As AI regulations continue to evolve, businesses must stay agile and compliant to avoid regulatory fines and legal risks.

Stay ahead of the curve by adopting responsible AI practices today!