WHAT THIS BILL REGULATES · 2 REQUIREMENT TYPES
How Is This Bill Enforced
Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.
(1) 1 No employerEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a) shall utilize or apply any artificial intelligence unless the employerEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a), or an entity acting on behalf of such employerEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a), shall have conducted an impact assessment for the application and use of such artificial intelligence. Following the first impact assessment, an impact assessment shall be conducted at least once every two years. An impact assessment shall be conducted prior to any material change to the artificial intelligence that may change the outcome or effect of such system. Such impact assessments shall include: (a) a description of the objectives of the artificial intelligence; (b) an evaluation of the ability of the artificial intelligence to achieve its stated objectives; (c) a description and evaluation of the objectives and development of the artificial intelligence including: (i) a summary of the underlying algorithms, computational modes, and tools that are used within the artificial intelligence; and (ii) the design and training data used to develop the artificial intelligence process; (d) the extent to which the deployment and use of the artificial intelligence requires input of sensitive and personal data, how that data is used and stored, and any control users may have over their data; (e) an estimate of the number of employees already displaced due to artificial intelligence; and (f) an estimate of the number of employees expected to be displaced or otherwise affected due to the increased use of artificial intelligence in the workplace.
This section establishes the core impact assessment obligation. No covered employer may use or apply any artificial intelligence without first conducting an impact assessment. The assessment must be repeated at least every two years and upon any material change to the AI system that may change the outcome or effect of the system. The required contents are comprehensive, covering system objectives, algorithm descriptions, training data, personal data use, and both current and projected workforce displacement figures.
The scope of "artificial intelligence" is notably undefined in the bill — the term is used throughout without a statutory definition, leaving significant ambiguity about which systems trigger the assessment obligation.
(2) 2 Any impact assessment conducted pursuant to this subdivision shall be submitted to the department at least thirty days prior to the implementation of the artificial intelligence that is the subject of such assessment.
This section imposes a pre-implementation submission requirement: impact assessments must be filed with the Department of Labor at least 30 days before the AI system is implemented. This is a proactive regulatory disclosure obligation — the employer cannot wait to be asked.
(3)(a)–(b) "EmployerEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a)" means a business that: (i) is resident in the state, (ii) is not a small businessSmall business"Small business" means a business that: (i) is resident in the state, (ii) is independently owned and operated, (iii) is not dominant in its field, and (iv) employs one hundred or less people.Labor Law § 201-j(3)(b), and (iii) employs more than one hundred people. (b) "Small businessSmall business"Small business" means a business that: (i) is resident in the state, (ii) is independently owned and operated, (iii) is not dominant in its field, and (iv) employs one hundred or less people.Labor Law § 201-j(3)(b)" means a business that: (i) is resident in the state, (ii) is independently owned and operated, (iii) is not dominant in its field, and (iv) employs one hundred or less people.
This section defines the two key entity terms for the impact assessment obligation. An employer must be state-resident, not a small business, and employ more than 100 people. A small business is defined as state-resident, independently owned and operated, not dominant in its field, and employing 100 or fewer people. These definitions are captured in the top-level definitions object.
(1)(a) 3 A surcharge on corporations that terminate the employment or substantially reduce the hours of at least the threshold number of employees pursuant to this subdivision due to any system or process that uses algorithms, computational models, artificial intelligence techniques, robotic hardware, or a combination thereof, to automate, support, or replace human labor is imposed at the rate of two percent of the corporation's business income base. The threshold number of employees shall be: (i) for employersEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a) with between one hundred and two hundred fifty employees, twenty-five or more employees; (ii) for employersEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a) with between two hundred fifty-one and five hundred employees, fifty or more employees; (iii) for employersEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a) with between five hundred one and one thousand employees, one hundred or more employees; and (iv) for employersEmployer"Employer" means a business that: (i) is resident in the state, (ii) is not a small business, and (iii) employs more than one hundred people.Labor Law § 201-j(3)(a) with one thousand one or more employees, two hundred fifty or more employees.
(1)(b) 3 The surcharge shall be reported and paid to the commissioner no less frequently than on an annual basis. The payments shall be accompanied by a return in the form and containing the information the commissioner may prescribe.
(1)(c) 3 The commissioner, in consultation with the department of labor, may waive the surcharge set forth by paragraph (a) of this subdivision for an eligible corporation. The commissioner, in consultation with the department of labor, shall establish a process whereby eligible corporations may apply to have the surcharge waived. For the purposes of this section, an eligible corporation shall be: (i) A business that is found by the department of labor to be experiencing or anticipating a labor shortage; (ii) A business that demonstrates that it requires the use of algorithms, computational models, artificial intelligence techniques, robotic hardware, or a combination thereof, to protect or improve the production of agricultural commodities within the state; or (iii) A small businessSmall business"Small business" means a business that: (i) is resident in the state, (ii) is independently owned and operated, (iii) is not dominant in its field, and (iv) employs one hundred or less people.Labor Law § 201-j(3)(b), as defined by section one hundred thirty-one of the economic development law, that demonstrates that it requires the use of algorithms, computational models, artificial intelligence techniques, robotic hardware, or a combination thereof, to remain economically viable.
(1)(d) 4 The department of labor shall annually report to the legislature on the number of waivers that it has granted pursuant to paragraph (c) of this subdivision, in the preceding year and the justification for why each waiver was granted. Such report shall be sent to the temporary president of the senate, the minority leader of the senate, the speaker of the assembly, and the minority leader of the assembly and shall be made available to the public on the website of the department.
This section imposes a 2% surcharge on the business income base of corporations that terminate employment or substantially reduce hours of a threshold number of employees due to automation or AI. The threshold scales by employer size: 25 employees for employers with 100–250 employees, 50 for 251–500, 100 for 501–1,000, and 250 for employers with over 1,000 employees. The surcharge is reported and paid annually. The Tax Commissioner may waive the surcharge for businesses experiencing labor shortages, agricultural producers, and small businesses demonstrating economic necessity.
The Department of Labor must annually report to the legislature on waivers granted, including justifications, and make the report publicly available.
(2)(a)–(b) 5 A surcharge on corporations that use artificial intelligence for data miningData mining"Data mining" shall mean a process involving pattern-based queries, searches, or other analyses of one or more electronic databases.Tax Law § 186-h(2)(a) is imposed at the rate of two percent of the corporation's business income base. For the purposes of this subdivision, the term "data miningData mining"Data mining" shall mean a process involving pattern-based queries, searches, or other analyses of one or more electronic databases.Tax Law § 186-h(2)(a)" shall mean a process involving pattern-based queries, searches, or other analyses of one or more electronic databases. (b) The surcharge shall be reported and paid to the commissioner no less frequently than on an annual basis. Surcharge payments shall be accompanied by a return in the form and containing the information the commissioner may prescribe.
This section imposes a separate 2% surcharge on the business income base of corporations that use artificial intelligence for data mining. Data mining is defined broadly as any process involving pattern-based queries, searches, or other analyses of one or more electronic databases. Unlike the worker displacement surcharge, this surcharge has no displacement threshold and no waiver mechanism — it applies to any corporation using AI for data mining.
(3)(a)–(b) Except as otherwise provided in this section, the surcharges imposed under this section shall be administered and collected by the commissioner in a like manner as the taxes imposed by article twenty-eight of this chapter. All the provisions of article twenty-eight of this chapter, including the provisions relating to definitions, exemptions, returns, personal liability for the tax, collection of tax from the customer, payment of tax, and the administration of the taxes imposed by such article, shall apply to the surcharges imposed under the authority of this section so far as those provisions can be made applicable to the surcharges imposed by this section, with such modifications as may be necessary in order to adapt the language of those provisions to the surcharges imposed by this section. Those provisions shall apply with the same force and effect as if the language of those provisions had been set forth in full in this section, except to the extent that any of those provisions is either inconsistent with a provision of this section or is not relevant to the surcharge imposed by this section. For purposes of this section, any reference in this chapter to a tax or the taxes imposed by article twenty-eight of this chapter shall be deemed also to refer to the surcharges imposed by this section unless a different meaning is clearly required. (b) Notwithstanding the provisions of paragraph (a) of this subdivision: (1) the exemptions provided for in section eleven hundred sixteen of this chapter, other than the exemptions in paragraphs one, two and three of subdivision (a) of such section, shall not apply to the surcharges imposed by this section. (2) the credit provided in subdivision (f) of section eleven hundred thirty-seven of this chapter shall not apply to this section.
This section incorporates the administration and collection provisions of Article 28 of the Tax Law (sales and use tax) to govern the surcharges imposed under this bill. It provides that Article 28 provisions apply with necessary modifications, except where inconsistent with this section. Certain exemptions and credits are expressly excluded.
(4) Notwithstanding any provision of law to the contrary, all surcharge monies collected and received by the commissioner under this section shall be deposited daily to the credit of the comptroller with those responsible banks, banking houses or trust companies the comptroller may designate. Those deposits shall be kept separate and apart from all other monies in the possession of the comptroller. The comptroller shall require adequate security from all such depositories. All surcharge monies collected and received under this section shall be paid to the department of labor to be used, in a manner prescribed by the commissioner of the department of labor, for worker retraining programs administered by the department, workforce development programs administered by the department or to be paid to the unemployment insurance fund.
This section directs all surcharge revenue to the Department of Labor for worker retraining programs, workforce development programs, or the unemployment insurance fund. Revenue must be deposited daily with designated banks and kept separate from other state funds. This is a revenue allocation provision imposing obligations on the Comptroller and the Department of Labor, not on private employers.
This act shall take effect immediately; provided, however, that section three of this act shall take effect January 1, 2026.
The act takes effect immediately upon enactment, except that the tax law amendments (section 3, adding Tax Law § 186-h) take effect January 1, 2026. This creates a staged implementation: the impact assessment requirements under Labor Law § 201-j are operative immediately, while the surcharge obligations begin January 1, 2026.