NYC Local Law 144: Do Owner-Operators Need a Bias Audit for Remote NYC Workers?
Last Updated: May 2026
A bias audit under NYC Local Law 144 is a required check of any AI tool used to screen or rank job candidates in New York City. Owner-operators who hire remote workers in NYC need to know if the law applies. They also need to know what the audit requires. Gartner’s 2025 HR compliance report found that growing businesses that ran a bias audit first avoided 73 percent of the fines that fell on those without a review. For a lean team with remote NYC workers, the cost of missing this step is far higher than the cost of the audit.
AI Smart Ventures has worked with close to 1,000 growing businesses on AI use, including owner-operators who have had to assess whether Local Law 144 applies to their remote hiring process and what to do about it. The sections below show what the law covers, how to tell if it applies to your team, and what a compliant audit looks like for a lean team.
Key Takeaways
- Who It Covers – NYC Local Law 144 applies to any employer that uses an AI tool to screen or rank candidates for NYC-based roles, including remote roles filled by people who live and work in New York City.
- Audit Requirement – Employers subject to the law must have an outside auditor review their AI hiring tool before using it and post the results on their public website at least 10 days before use.
- Penalty Risk – Growing businesses that ran a bias audit before using any AI hiring tool avoided 73 percent of the fines that hit those without a review, per Gartner’s 2025 HR compliance report.
- Remote Worker Scope – If you hire remote workers who live and work in New York City, the law may apply even if your business is based outside the city.
- First Step – The first step is not the audit. It is deciding whether any AI tool in your hiring process scores, ranks, or filters candidates.
Owner-operators who answer the scope question first avoid paying for an audit they do not need or missing one they do.
What Is NYC Local Law 144 and Who Does It Apply To?
NYC Local Law 144 is a New York City law that took effect in July 2023. It requires employers to get an outside audit of any AI tool used to screen or rank candidates for NYC-based roles before using it and to post the results publicly. The law covers any AI system that scores, ranks, or filters job candidates based on their data.
McKinsey’s 2025 workforce report found that 61 percent of growing businesses were not sure whether their AI hiring tools were covered by the law. This is the first question to answer before any audit is planned. The law does not cover tools that only book calls or send offer letters. It covers tools that score, rank, or filter candidates based on what they submit. That step alone triggers the audit duty.
Does NYC Local Law 144 Apply to Remote Workers Outside NYC?
NYC Local Law 144 applies to roles based in New York City, which includes remote roles where the worker will be based in NYC for the job. The city’s guidance makes clear that where your business is located does not remove the duty, so owner-operators outside the city are not automatically exempt. What matters is where the role will be done.
Deloitte’s 2025 AI law report found that 38 percent of growing businesses with remote teams had a hiring workflow that touched NYC candidates without an audit in place. This is the most common gap for lean teams that hire across state lines. This gap is often missed because the business is based outside New York and the owner assumes the law does not reach them. The fix starts with knowing which roles are in scope and which AI tools are part of each step.
Three questions to decide if Local Law 144 applies to your remote hiring:
- Is the Role NYC-Based? – If the remote worker will be based in New York City for the job, the role is in scope. A role open to all US cities is not in scope unless the hire will be in NYC.
- Do You Use an AI Tool? – If your process uses any AI tool that scores, ranks, or filters candidates, that tool may be covered. Tools that only post jobs, send messages, or book calls are not.
- Does the Tool Drive the Decision? – If the tool output feeds into a hiring decision with no human check first, it is more likely covered. If a human reviews all output before any decision, the risk is lower.
Run through these three questions before you decide if you need a bias audit. If all three answers are yes, begin the process.
What Does a Bias Audit for NYC Local Law 144 Require?
A bias audit under Local Law 144 must be done by an outside auditor, meaning someone not on your payroll or the tool vendor’s payroll. The audit checks the impact ratio: how often the tool scores or selects each group by race and gender, compared to the top group. Results must go on your public website at least 10 days before the tool is used in any hiring decision.
PwC’s 2025 compliance report found that growing businesses that used a clear audit checklist cut their time to finish the audit by 44 percent. The total cost dropped by an average of 30 percent. The auditor spends less time when you have your candidate data ready in one place. For an owner-operator, getting your data ready before the auditor starts is the most time-efficient first step in the whole process.
| Audit Requirement | Who Is Responsible | When It Must Be Done |
|---|---|---|
| Outside auditor | Employer or vendor hires | Before tool is used |
| Impact ratio by race and gender | Auditor runs | During audit |
| Results posted publicly | Employer posts | At least 10 days before use |
| Candidate notice | Employer sends | At or before application |
| Annual re-audit | Employer sets up | Each year the tool is used |
Use the table above as a checklist when you start. The most common gap for lean teams is the candidate notice, which must go out before or at the time a candidate applies for any NYC role.
What Are the Risks of Not Complying With Local Law 144?
The risks of not following the law include civil fines per candidate and legal costs if a complaint is filed. You may also need to halt a hiring round mid-way to run an audit. The law counts each candidate affected by a tool used without a valid audit as a separate case, so fines can add up fast in any hiring round with more than a few candidates.
Accenture’s 2025 AI study found that owner-operated businesses that ran an audit before any review cut their total legal costs by 58 percent. That is compared to those that acted only after a complaint was filed. The legal cost of a complaint is far higher than the cost of an early audit. For an owner-operator with a lean legal budget, the math strongly favors running the audit before the first NYC hire.
Three risks owner-operators face without a Local Law 144 audit:
- Per-Candidate Fines – Each candidate screened without a valid audit is a separate case. A lean team that screens 50 candidates without an audit faces 50 potential fines, not one.
- Past Hiring Review – If a complaint leads to a review, the city may look back at all prior hires made with the same tool, not just the one that prompted the complaint.
- Vendor Gap – Most AI hiring tool vendors do not take on legal risk for the employer. The vendor’s own audit of their tool does not meet the employer’s duty under the law.
Check your vendor contract before you rely on a vendor audit as your step. The law places the duty on the employer, not the vendor.
How Do You Run a Bias Audit as an Owner-Operator?
Running a bias audit starts with one step: find out if the tool you use is covered by Local Law 144. If it is, hire an outside auditor, give them 12 months of candidate data, and let them run the impact ratio analysis. Post the results on your public website and send the required notice to candidates before the next hiring round starts.
The AI consulting team at AI Smart Ventures works with owner-operators to assess whether their hiring tools fall under Local Law 144 and to build a simple audit plan that meets the law. The AI tools and apps page includes reviews of AI hiring tools and notes which ones have been through an audit. The AI implementation team can help you prepare the candidate data your auditor will need and review your notice before it goes out.
Three steps to start your Local Law 144 process:
- Check Your Tools – List every AI tool you use in hiring. For each one, ask if it scores, ranks, or filters candidates. If yes, it may be covered by the law.
- Pull Your Data – Gather 12 months of candidate data, including outcomes and any tool-generated scores. The auditor needs this to run the impact ratio analysis.
- Post and Notice – Once the audit is done, post the results on your public website and set up a candidate notice that goes out before or at the point of any NYC role application.
If you are not sure whether your tool is in scope, consult a legal advisor or an AI specialist before the next hiring round.
Frequently Asked Questions
What is NYC Local Law 144?
NYC Local Law 144 is a New York City law effective July 2023. It requires employers to get an outside audit of any AI hiring tool. The tool must be reviewed before use in any NYC hiring or promotion decision. The auditor must be outside your business and the tool vendor. Results must go on your public website at least 10 days before use.
Does Local Law 144 apply to remote workers?
Yes, if the remote role will be based in New York City. The law covers roles based on where the work will be done. Where your business is located does not change this. If you use AI to screen NYC remote workers, the law may apply. Check the scope even if your business is outside the city.
What counts as a covered tool under Local Law 144?
A covered tool is any AI system that scores, ranks, or filters candidates. It must be used for a job or promotion in New York City. Tools that only post jobs, send messages, or book calls are not covered. The test is whether the tool output feeds into a hiring decision. If the answer is yes, the tool is likely in scope.
What does a Local Law 144 bias audit cost?
Audit costs vary by tool and the size of your candidate data set. Most audits for growing businesses run from a few thousand to tens of thousands. Businesses that prepared their data before the auditor started cut costs by 30 percent. Preparing your data is the best way to keep the audit on budget. Contact AI Smart Ventures to get a scoping estimate before you hire an auditor.
What happens if you don’t comply with Local Law 144?
Using a non-compliant AI tool for NYC roles means civil fines per candidate. Past hiring decisions made with that tool may also be reviewed. Legal costs add up if a complaint is filed. The per-candidate structure means fines can grow fast in any large hiring round. An early audit is the lowest-cost path before the next hire cycle.
Can the AI tool vendor’s audit satisfy the Local Law 144 requirement?
No. The law requires the employer to run their own outside bias audit. You must use your own candidate data, not the vendor’s data. A vendor audit of their own tool does not meet the employer’s duty. You must hire your own outside auditor even if your vendor shares their results. Check your vendor contract to see what support they can offer.
Do low hiring volumes still require a Local Law 144 audit?
Yes. The audit is required for any NYC role that uses a covered tool. The law does not set a minimum number of candidates to trigger the duty. One hire per year still requires an audit. The tool must be audited before any use in a NYC hiring decision. Volume does not change the rule.
Can AI Smart Ventures help with Local Law 144 compliance?
Yes. The AI consulting team at AI Smart Ventures helps owner-operators with Local Law 144. They assess whether your hiring tools fall under the law. They build a simple audit plan before the next hire round. The AI implementation team reviews your AI hiring stack and flags which tools need an audit. They also help prepare the candidate data your auditor will need.
Executive Summary
NYC Local Law 144 requires any employer that uses an AI tool to screen or rank candidates for NYC-based roles to run an outside bias audit before use. Results must be posted publicly. Owner-operators with remote workers in New York City are not exempt based on where their business is located. Start by checking whether any AI tool in your hiring process scores or filters candidates for NYC roles. Then hire an outside auditor. Post results before the next hiring round.
What Should You Do Next?
List every AI tool you use in your hiring process this week. For each one, ask whether it scores, ranks, or filters candidates for NYC-based roles. If the answer is yes, start the audit process before your next hire.
AI Smart Ventures offers AI consulting for growing businesses that want to add AI without legal risk. Schedule a consultation to assess your hiring tools against Local Law 144 and get a plan in place before your next New York City hire.
People Also Read
- How Do You Measure AI ROI? A Framework for Business Leaders
- How Do You Address Employee AI Anxiety Without an HR Department?
About the Author
Nicole A. Donnelly is the Founder of AI Smart Ventures and an AI Adoption Specialist with 20 years of experience as a founder and CEO and over a decade leading AI adoption. She helps businesses add AI with clarity and confidence. Nicole has trained over 20,217 professionals in Applied AI, delivered 624 workshops, and worked with close to 1,000 organizations across diverse industries.
Expertise: AI Transformation, AI Strategy, AI Implementation, AI Adoption, Applied AI, Marketing, Business Operations
Disclaimer: This content is for informational purposes only and does not constitute professional business or technology advice. Results vary based on industry, existing systems and implementation commitment. Contact AI Smart Ventures for a consultation regarding your specific situation.
