A recently enacted New York City employment law has the potential to impact employers far outside the Big Apple. Since July 5, the City’s Automated Employment Decision Tool law requires employers that use AI and other machine learning technology as part of their hiring process to perform an annual audit of that technology. The audits must be performed by a third party and check for evidence of bias in recruitment. Candidates are to be informed of the employer’s use of AI technology and results of the annual audit must be posted on the employer’s website.

If all of this sounds like a hassle and expense your organization could do without, it isn’t as easy to avoid as simply not opening up shop (or shutting down operations) in New York City. That’s because the new law applies to any business that a New York City resident applies to for employment, wherever located. And in any event, a similar law may soon be coming to your jurisdiction. New Jersey, Maryland, Illinois, and California are all considering legislation or regulations targeted at AI technology use in hiring.

Hiring Talent Able to Obtain a Security Clearance

Perhaps no category of employer will have a trickier time navigating this new landscape than government contractors seeking to hire cleared or clearable talent. Most of the obvious (and obviously abhorrent) screening categories covered under the new AI laws – for example, race, gender, ethnicity, age, pregnancy status – are irrelevant to security clearance determinations and were already equally applicable to all employers before the advent of AI. But some of the “other protected characteristics” – like national origin, mental disability, and in some jurisdictions, criminal history – can pose significant obstacles to an applicant in obtaining or retaining a security clearance necessary for employment.

Some government contractors have tried to walk this line through “pre-hiring clearability assessments” designed to ferret out perceived problem candidates with otherwise legally protected characteristics under the guise of “clearability.” But, as I’ve written about previously, this is a dangerous game and potentially a gift to plaintiff’s attorneys everywhere.

Talk to Legal About Your Hiring Assessments

Even though these pre-hiring assessments make objective business sense (who wants to hire a candidate who can’t get cleared?), the reality is that there are very few hard-and-fast rules besides a requirement of U.S. citizenship and a prohibition on current use of illegal drugs when it comes to security clearance eligibility. This means that the government contractor is necessarily making a subjective judgment call on whether the job applicant can pass muster with the government – and using potentially protected characteristics to do it. Therein lies the problem. Subjective judgment calls about clearability may very well be viewed by courts as a pretext for illegal discrimination. The federal government has shielded itself from such lawsuits with national security exceptions to normal anti-discrimination laws. But private entities – even U.S. government contractors – don’t usually get that luxury.

Employers should talk to their legal counsel and obtain a thorough assessment of whether any pre-hiring clearability screening efforts they’re using pass legal muster. If they don’t, the time to get legally compliant is now – and certainly before third party AI audits and public disclosure requirements create a nightmare scenario.



This article is intended as general information only and should not be construed as legal advice. Although the information is believed to be accurate as of the publication date, no guarantee or warranty is offered or implied. Laws and government policies are subject to change, and the information provided herein may not provide a complete or current analysis of the topic or other pertinent considerations. Consult an attorney regarding your specific situation. 

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Sean M. Bigley retired from the practice of law in 2023, after a decade representing clients in the security clearance process. He was previously an investigator for the Defense Counterintelligence and Security Agency (then-U.S. Office of Personnel Management) and served from 2020-2024 as a presidentially-appointed member of the National Security Education Board. For security clearance assistance, readers may wish to consider Attorney John Berry, who is available to advise and represent clients in all phases of the security clearance process, including pre-application counseling, denials, revocations, and appeals. Mr. Berry can be found at https://www.berrylegal.com/.