NY Proposes AI Layoff Disclosure Rule Under WARN Act

New York Gov. Kathy Hochul proposed that the Empire State be the first in the nation to require that employers disclose when mass layoffs are related to the adoption of artificial intelligence.

Hochul said she will direct the New York State Department of Labor (NYSDOL) to amend the New York Worker Adjustment and Retraining Notification (WARN) Act regulations to require that employers disclose in their notices whether layoffs are related to the employer’s use of AI. Under the amendment, if AI adoption is the reason behind mass layoffs, the employer must provide those impacted workers with access to workforce training programs and supports.

“According to the governor, this proposal will provide the [NYSDOL] with real data on the potential impact of technology on workers and will ensure that the benefits of AI integration are compatible with an economy where workers can thrive,” said Shawn Matthew Clark, an attorney in the New York City office of Littler.

“The governor’s proposal does not provide guidance on how this information should be presented or how the data will be used, but it is one more content obligation that will need to be added to the many other complex notice requirements that already exist in New York WARN,” he said.

New York employers with 50 or more full-time employees must issue WARN notices if they plan to lay off at least 25 full-time employees, accounting for at least a third of the workforce at a single location, or a total of 250 full-time employees. To trigger federal WARN Act notice requirements, employers with 100 or more employees must be laying off at least 50 workers at a single worksite.

A dozen other states have WARN requirements in place, but none require businesses to determine whether AI was the reason for the layoffs. There is currently no timetable for New York to implement the change.

A Growing Concern

Using the WARN Act to track AI-related layoffs has some potential flaws, including that it only covers mass layoffs and that its effectiveness depends on employers determining and accurately reporting whether a layoff was AI-related.

That said, the anxiety related to the unknown long-term effects of AI on the workforce is well-placed, as some worker displacement is expected. Experts call for employers to engage in retraining and reskilling to try to reduce the impact.

“The rise of AI in the workplace has been a matter of concern to many state lawmakers across the nation, as well as federal regulators,” said Jack Blum, an attorney in Polsinelli’s New York City and Washington, D.C., offices. “These proliferating laws show the need for employers to be intentional about their use of AI tools in making employment decisions,” he said. 

“Legal and human resources leaders should familiarize themselves with how their organizations are using AI tools in the employment context and design policies to ensure that the rapidly proliferating state and local requirements around AI usage are met,” he added.