Local Law 144 Penalties: What Happens If You Don't Comply?

NYC Local Law 144 of 2021 has been enforceable since July 5, 2023 — nearly three years. Despite this, compliance remains remarkably low. A Cornell University study cited by HR Brew in April 2026 found that only about 5% of NYC employers using AI hiring tools publicly post their bias audit results, and only about 4% comply with candidate notification requirements. Much of this non-compliance stems from a perception that enforcement is weak. That perception is about to change.

The Penalty Structure

LL144 defines three separate violation types: failure to conduct an annual independent bias audit, failure to publicly disclose audit results, and failure to provide candidate notification at least 10 business days before AEDT use. Each of these is an independent violation. Missing all three means three concurrent penalty streams.

The penalty structure compounds quickly. A first violation carries a $500 fine, with each additional violation on the same day also at $500. For subsequent violations, the range increases to $500–$1,500 per violation. Each day that a violation continues is treated as a separate violation. This means an employer that has never conducted a bias audit but has been using an AEDT since July 2023 faces a theoretical exposure of $500+ per day for nearly three years — on each of the three violation types.

A Practical Example

Consider a mid-size company that has been using an AI resume screening tool for NYC positions since January 2024, without conducting a bias audit, without publishing results, and without notifying candidates. As of April 2026, that is approximately 830 days of non-compliance across three violation types.

At the minimum penalty of $500 per violation per day across three violation types, the theoretical maximum exposure is $500 × 3 × 830 = $1,245,000. At the higher end ($1,500 for subsequent violations), the theoretical maximum reaches $3,735,000. While DCWP is unlikely to pursue the maximum in every case, the math illustrates why proactive compliance is substantially cheaper than waiting for enforcement.

The Comptroller Audit: Why Enforcement Was Weak

On December 2, 2025, the Office of the New York State Comptroller published an audit of DCWP's enforcement of LL144 covering the period from July 2023 to June 2025. The findings were damning.

75% of test calls misrouted. Comptroller auditors placed test calls to 311 — NYC's main government helpline — about AEDT-related issues. Three out of four calls were misrouted and never reached DCWP. This means that even when candidates or employers tried to report issues or seek guidance, the complaint system failed to connect them with the right agency.

Massive under-detection. DCWP surveyed 32 companies and identified only 1 case of non-compliance. The Comptroller's own auditors reviewed the same 32 companies and found at least 17 potential violations — a 17× discrepancy. DCWP's self-reported detection rate was effectively 6% of actual non-compliance.

Unused enforcement tools. The NYC Office of Technology and Innovation (OTI) had developed an enforcement workbook specifically for LL144 investigations. DCWP never used it. DCWP also did not consult OTI for technical expertise on evaluating AEDTs — despite OTI being the city agency with the most relevant technical knowledge.

Minimal complaint volume. During the entire two-year audit period, DCWP received only 2 AEDT-related complaints. This is almost certainly a function of the broken complaint routing system rather than actual compliance.

What Is Changing

DCWP has committed to implementing most of the Comptroller's recommendations. The reforms include improved complaint routing through 311 so that AEDT issues actually reach DCWP, cross-trained investigators who can evaluate AEDT compliance (rather than relying solely on consumer protection generalists), and a shift toward more proactive enforcement — including compliance sweeps rather than waiting for complaints.

The regulatory environment is also evolving beyond LL144 itself. The GUARD Act, passed unanimously by the NYC Council in November 2025, creates an Office of Algorithmic Data Accountability and establishes citywide standards for AI fairness, privacy, and transparency. At the state level, the RAISE Act (signed December 2025, effective January 2027) targets large AI developers with mandatory safety protocols, incident reporting, and annual audits. And the proposed NY AI Act (A8884) would expand LL144-style requirements statewide with AG enforcement and a private right of action.

Companies that achieve LL144 compliance now will be significantly better positioned for these incoming requirements. The compliance infrastructure — AEDT inventories, bias testing, disclosure processes, candidate notification systems — translates directly to the broader AI governance frameworks taking shape at both city and state levels.

The EU AI Act Amplifier

For companies with EU operations or EU-based applicants, the penalty calculus intensifies. AI used in employment decisions is classified as high-risk under EU AI Act Annex III. EU AI Act penalties for high-risk non-compliance reach €15 million or 3% of annual worldwide turnover — whichever is higher. An LL144 compliance failure that simultaneously constitutes an EU AI Act violation creates dual enforcement exposure across two jurisdictions. For more on dual compliance requirements, see Does the EU AI Act Apply to NYC Companies?

What to Do Now

If you have not yet achieved LL144 compliance, the priority actions are clear. First, conduct an AEDT inventory to determine which tools in your hiring process qualify. Second, engage an independent auditor — one with no conflict of interest — to perform the bias audit. Third, prepare your public disclosure and candidate notification materials. Fourth, publish and implement immediately.

The window between now and the next phase of enforcement is your compliance window. Waiting for a DCWP investigation to compel action means waiting until penalties are already accruing.

Lexara Advisory LLC — AI governance consulting, not legal practice. This article provides general compliance information only and does not constitute legal advice.