New York Bill Would Limit Employers' Ability to Use Electronic Monitoring and Automated Decision Tools

​The New York legislature recently introduced Senate Bill 07623, which would dramatically restrict employers' ability to use both electronic monitoring and automated employment decision-making technology in the state.

The bill would apply to all New York employers, regardless of size, including an employer's labor contractors. While the bill is currently being reviewed by the Rules Committee and still must work its way through the legislative process, it is expected to pass in some form. The bill would create significant new obligations and restrictions for New York employers.

Electronic Monitoring Tools

The bill defines an electronic monitoring tool as "any system that facilitates the collection of data concerning worker activities or communications by any means other than direct observation, including the use of a computer, telephone, wire, radio, camera, electromagnetic, photoelectric, or photo-optical system."

This broad definition would include a number of commonly used tools in the employment space, including email, keystroke monitoring and biometric monitoring. If passed, bill would make it unlawful for employers to use these tools to surveil employees residing in New York, unless the tool is primarily intended to accomplish an allowable purpose, the specific type of tool is strictly necessary to accomplish the allowable purpose and is the least invasive means that could reasonably be used to accomplish that purpose, and the electronic monitoring is limited to the smallest number of workers and collects the least amount of data necessary to accomplish the allowable purpose.

"Allowable purposes" for these tools include:

• Enabling a worker to accomplish an essential job function.
• Monitoring production processes or quality.
• Assessing worker performance.
• Ensuring legal compliance.
• Protecting the health, safety, or security of workers.
• Administering wages or benefits.
• Additional purposes to enable business operations as determined by the New York Department of Labor.
  

The bill would require employers to notify employees who reside in New York that they will be subject to electronic monitoring.

The notice that bill would require is extraordinarily thorough, and must include:

• A description of the allowable purpose for which the tool will be used.
• A description of the specific employee data to be collected, and the activities, communications, and job roles that will be electronically monitored.
• A description of the dates, times, and frequency that electronic monitoring will occur.
• Whether any employee data collected through electronic monitoring will be used as an input in an automatic employment decision tool.
• Whether the data collected by electronic monitoring will be used to inform an employment decision by the employer.
• Whether any employee data collected by electronic monitoring will be used to assess employees' productivity performance or to set productivity standards, and if so, how.
• A description of where any employee data collected by the tool will be stored and the length it will be retained.
• An explanation for how the specific electronic monitoring practice is the least invasive means available to accomplish the allowable purpose.
  

Notice of the specific form of electronic monitoring must be clearly and conspicuously posted and cannot say that electronic monitoring "may" take place or that the employer "reserves the right to do so." Employers that engage in random or periodic electronic monitoring must clearly and conspicuously inform affected workers of the specific events that are being monitored at the time the monitoring takes place, unless the monitoring is necessary to preserve the integrity of an investigation of illegal activity or to protect the immediate safety of workers, customers or the public.

Employers would be unable to use electronic monitoring technology to "unduly or extremely intensify the conditions of work or to harm the health and safety of employees," or to "identify, punish, or obtain information about employees engaging in activity protected under labor and employment law."

Employers would be prohibited from requiring employees to install monitoring applications on their personal devices, or to "wear, embed, or physically implant those devices," whether subcutaneously or on clothing or personal accessories, unless the monitoring in strictly necessary to accomplish essential job functions. Likewise, employers could not electronically monitor off-duty employees, and would be specifically obligated to disable location-tracking applications outside of the activities and time necessary for an employee to perform his or her job. Certain kinds of electronic monitoring, including facial recognition, gait or emotion recognition technology, would be strictly banned.

Automated Employment Decision Tools

S07623 would impose restrictions on New York employers' ability to use automatic employment decision pools. Like the New York City rules, S07623 would prohibit the use of automatic tools to "substantially assist or replace discretionary decision-making," unless subject to a bias audit performed no more than one year prior to the tool's use. Even with a proper bias audit in place, New York employers would be unable to rely solely on output from an automated tool in hiring, promotion, termination, disciplinary or compensation decisions.

Similar to New York City's rules, S07623 defines automated employment decision tool as "any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output" such as a "score, classification, or recommendation, that is used to substantially assist or replace discretionary decision-making."

Under S07623, employers would be required to notify all job candidates or employees that an AEDT is being used no later than 10 business days prior to use and allow candidates to request an alternative selection process or accommodation that does not involve the automated tool. Within the same time frame, employers would be required to disclose the job qualifications and characteristics that the tool will use to make its assessment, as well as any outputs it will produce. Employers would be prohibited from requiring candidates or employees to consent to the use of an automated tool and from disadvantaging candidates or employees solely on their request for an accommodation.

Unlike the New York City provisions, S07623 places a number of additional restrictions on employers' use of automated tools. The automated tool could not be used to:

• Unduly or extremely intensify the conditions of work or to harm the health and safety of employees, including by setting unreasonable productivity quotas.
• Make predictions about a candidate or employee's behavior, beliefs, intentions, personality, emotional state, or other characteristic unrelated to the employee's essential job functions.
• Implement a dynamic wage-setting system that pays employees different wages for the same work.
• Draw on facial recognition, gait or emotional recognition technologies.
  

Under S07623, employers that make a hiring, promotion, termination, disciplinary, or compensation decision based on output from an automated tool must provide affected employees with:

The specific decision for which the tool was used.

• Any information or judgments used in addition to the tool in making the decision.
• The specific employee data that the tool used.
• The individual, vendor, or entity that created the tool.
• The individual or entity that executed and interpreted the results of the tool.
• A copy of any bias audits regarding the tool.
• Penalties
  

Penalties for violating S07623 could be severe. Employers that violate S07623's requirements would be subject to civil penalties for each day that a tool was used unlawfully, and failure to provide required notices under the law would give rise to a separate violation. Civil penalties would begin at $500 for a first violation and increase to $1,500 for subsequent violations. If passed, S07623 would take effect 180 days after being signed into law.

Lindsay Colvin Stone is an attorney with Sheppard Mullin in New York City. © 2023. All rights reserved. Reprinted with permission.