The penalty numbers attached to NYC Local Law 144 — $500 for a first violation, between $500 and $1,500 for subsequent violations — sound modest in isolation. Read against the actual statutory language, they are not modest at all. The rule's penalty clock runs per violation, per day, and a single AEDT in continuous use without a compliant audit can accumulate five- or six-figure exposure in weeks.

This note reads the penalty provision literally and works through what accumulation looks like in realistic scenarios.

The provision itself

NYC Admin Code § 20-872 establishes that a violation of § 20-871 (the substantive obligation not to use an AEDT without bias audit, public summary, and candidate notice) triggers a civil penalty. The first violation and each additional violation on the same day is subject to a penalty of $500. Each subsequent violation is subject to a penalty of not less than $500 and not more than $1,500. The provision also establishes that each day on which an AEDT is used in violation of the section constitutes a separate violation, and that the failure to provide the required candidate notice also constitutes a separate violation subject to the same penalty schedule.

Two features of the text matter. The penalty per violation is a range, not a fixed number, and the range's upper bound is three times the floor. The DCWP has discretion to assess a penalty as low as $500 or as high as $1,500 for each counted violation after the first, presumably based on good-faith remediation, cooperation, and the severity of the non-compliance.

The second feature is the per-day-per-violation compounding. An employer that uses a non-compliant AEDT for a single week has, at minimum, seven violations. An employer that uses the same AEDT for six months has approximately 180 violations. This compounds further if the candidate notice failure is counted as a separate violation stream, which the text supports.

What "violation" counts as

The language is that each day of use of an AEDT in violation is a separate violation, and that the failure to give notice is a separate violation. What the statute does not do is explicitly define whether each use of the AEDT (each candidate screened) is a separate violation or whether the per-day frame captures all uses on that day as one violation.

The most conservative reading, and the reading DCWP practice appears to follow in its published enforcement outcomes to date, treats each day of AEDT use as one violation in the "use" stream and the absence of notice for each candidate as a potential additional violation in the "notice" stream. Under this reading, a company that runs a non-compliant AEDT against 1,000 candidates over 30 days faces a "use" violation count of approximately 30 and a "notice" violation count of up to 1,000.

A more aggressive reading treats each candidate screened as a separate "use" violation, which would multiply the daily count by the candidate volume. DCWP has not, in published proceedings as of early 2026, pressed this aggressive reading. But the statutory text leaves it available.

Three realistic exposure scenarios

The following are illustrative, not predictive. They assume DCWP assesses at the floor ($500) where it has discretion. Any particular enforcement outcome will depend on the specific facts, the employer's cooperation, and DCWP's exercise of its penalty-range discretion.

Scenario one: mid-sized NYC employer, 90 days of non-compliant use, 300 candidates. Under the conservative reading: approximately 90 "use" violations plus up to 300 "notice" violations. At the statutory floor of $500 each, that is a nominal exposure around $195,000. At the $1,500 cap for subsequent violations, the upper end approaches $585,000.

Scenario two: large NYC employer using an AEDT for a full year without a posted audit summary, 5,000 candidates. Under the conservative reading: approximately 365 "use" violations plus up to 5,000 "notice" violations, for a nominal exposure in the low seven figures even at the statutory floor. Practical DCWP proceedings to date have typically settled well below strict nominal maximum, often involving remediation commitments rather than the full accumulated penalty. But the pre-settlement exposure number is what structures the settlement.

Scenario three: small NYC employer, unaware of the rule, 30 days of use, 40 candidates. Approximately 30 "use" violations plus up to 40 "notice" violations, nominal exposure at the floor around $35,000. For a small company this is still a significant financial consequence, and the reputational consequence of being the example case can exceed the financial one.

Why the penalty structure matters even for non-enforcement purposes

Even outside the context of an active DCWP proceeding, the exposure calculation matters. Directors-and-officers liability questions, corporate insurance underwriting, M&A due diligence — all of these increasingly reference quantifiable regulatory exposure. A company that acquires another company with a non-compliant AEDT is acquiring the accumulated liability, and the structure of the penalty is now part of the acquisition math.

A company that is contemplating a funding round with investors doing technology due diligence is increasingly asked about AEDT compliance. An answer that amounts to "we use an AEDT but have not performed a bias audit" is now, in 2026, a diligence finding with a dollar figure attached.

The practical implication

The penalty structure does not punish a single moment of non-compliance. It punishes the passage of time under non-compliance. Every day that an AEDT is in use without a compliant bias audit, public summary, and candidate notice adds to the count. The cheapest day to begin remediation is today. The most expensive day is the one on which a complaint is filed.

For an independent LL144 bias audit that restarts the compliance clock from today, see the service page.

Primary source. NYC Admin Code § 20-872 (civil penalties).