A3854

An Act concerning the use of automated employment decision tools in hiring decisions and supplementing Title 34 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. As used in this act:

“Automated employment decision tool” means any system the function of which is governed by statistical theory, or systems the parameters of which are defined by systems, including inferential methodologies, linear regression, neural networks, decision trees, random forests, and other learning algorithms, which automatically filter candidates or prospective candidates for hire or for any term, condition, or privilege of employment in a way that establishes a preferred candidate or candidates.

“Bias audit” means an impartial evaluation, including but not limited to testing, of an automated employment decision tool to assess its predicted compliance with the provisions of the “Law Against Discrimination,” P.L.1945, c.169 (C.10:5-1 et seq.), and any other applicable law relating to discrimination in employment.

“Commissioner” means the Commissioner of the Department of Labor and Workforce Development.

“Department” means Department of Labor and Workforce Development.

“Employment decision” means to screen a candidate for employment or otherwise to help decide compensation or any other terms, conditions, or privileges of employment.

b. It shall be unlawful to sell or offer for sale in the State an automated employment decision tool unless:

(1) the automated employment decision tool is the subject of a bias audit conducted in the past year prior to selling or offering the automated employment decision tool for sale;

(2) the sale of the automated employment decision tool includes, at no additional cost, an annual bias audit service that provides the results of that audit to the purchaser; and

(3) the automated employment decision tool is sold or offered for sale with a notice stating that the automated employment decision tool is subject to the provisions of this act.

c. Any employer in the State who uses an automated decision tool to screen a candidate for an employment decision shall provide on its Internet website a summary of the most recent bias audit.

d. Any person who uses an automated employment decision tool to screen a candidate for an employment decision shall notify each candidate of the following within 30 days of use:

(1) that an automated employment decision tool, which is subject to an audit for bias pursuant to this act, was used in connection with the candidate’s candidacy;

(2) the job qualifications or characteristics that an automated employment decision tool was used to assess in the candidate; and

(3) upon request of the candidate, the source of the data collected and the data retention policy of the employer.

e. (1) Any person that violates any provision of this act shall be liable for a civil penalty of not more than $500 for that person’s first violation and each additional violation occurring on the same day as the first violation, and not less than $500 nor more than $1,500 for each subsequent violation. Violations shall accrue on a daily basis for each automated employment decision tool that is sold or offered for sale in violation of this act.

(2) Each instance in which notice is not provided to a candidate within 30 days in violation of subsection d. of this section constitutes a single violation, and each 30-day period thereafter in which notice is not provided to a candidate constitutes a separate violation.

f. All penalties assessed under this section shall be payable to the State Treasurer and may be recovered with costs in a summary proceeding commenced by the commissioner pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).

g. The department, in consultation with the Division on Civil Rights, pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), shall promulgate rules and regulations to effectuate the purposes of this act.

h. This act is intended to affirm certain rights of candidates for employment under the circumstances specified in this act, and shall not be construed to reduce, limit, or curtail any rights of any candidate provided by law, or to limit the authority of the State or its agencies to investigate and enforce rights relating to bias and discrimination in employment, or to promulgate rules and regulations relating to bias and discrimination in employment.

2. This act shall take effect on the first day of the third month next following enactment, except that the commissioner may take any anticipatory administrative action in advance as shall be necessary for implementation.

STATEMENT

This bill regulates the use of automated employment decision tools during the hiring process to minimize employment discrimination that may result from the use of the tools.

Under the bill, “automated employment decision tool” means any system the function of which is governed by statistical theory, or systems the parameters of which are defined by systems, including inferential methodologies, linear regression, neural networks, decision trees, random forests, and other learning algorithms, which automatically filters candidates or prospective candidates for hire or for any term, condition, or privilege of employment in a way that establishes a preferred candidate or candidates.

The bill prohibits the sale of automated employment decision tools in the State unless:

(1) the tool is the subject of a bias audit conducted in the past year prior to selling the tool or offering the tool for sale;

(2) the sale of the tool includes, at no additional cost, an annual bias audit service that provides the results of the audit to the purchaser; and

(3) the tool is sold or offered for sale with a notice stating that the tool is subject to the provisions of the bill.

The bill provides that any employer in the State who uses an automated decision tool to screen a candidate for an employment decision shall provide on its website a summary of the most recent bias audit.

In addition, the bill provides that any person who uses an automated employment decision tool to screen a candidate for an employment decision is required to notify each candidate of the following within 30 days of the use of the tool:

(1) that an automated employment decision tool, which is subject to an audit for bias, was used in connection with the candidate’s application for employment;

(2) the tool assessed the job qualifications or characteristics of the candidate; and

(3) upon request of the candidate, the source of the data collected and the data retention policy of the employer.

The bill provides for civil penalties to be collected for violations of its provisions.

The bill is intended to affirm certain rights of candidates for employment under the circumstances specified in the bill, and will not be construed to reduce, limit, or curtail any rights of any candidate provided by law, or to limit the authority of the State or its agencies to investigate and enforce rights relating to bias and discrimination in employment, or to promulgate rules and regulations relating to bias and discrimination in employment.