Module 5: Existing Laws & AI · BoK III.B
Nondiscrimination Laws Across Five Sectors
Sector nondiscrimination laws still apply to AI across healthcare, insurance, hiring, credit and housing. Key anchors: Section 1557 (healthcare), NYC Local Law 144 mandating AI audits for employment, FCRA for credit, and the Fair Housing Act (1968) with HUD 2020 guidance.
Bias-free training data is hard to find, discriminatory impact is subjective, useful data goes stale, and privacy law restricts moving it. Multi-step GenAI pipelines multiply the variables. The sector laws still apply.
| Sector | Law & guidance to know |
|---|---|
| Healthcare | HHS OCR final rule (Section 1557) → no discrimination by race, colour, national origin, sex, age, disability → covered entities must proactively identify and address discriminatory impacts of AI tools and take corrective action · 21st Century Cures Act → not AI-specific, promotes advanced tech plus accessibility and transparency of health data |
| Insurance | State regulated in the US · some discrimination is inherent and lawful (younger drivers pay more, health conditions raise premiums) · NAIC Model Law (2020) → algorithms must not perpetuate unlawful or unethical discrimination · New York has AI-specific guidance for authorised insurers |
| Hiring & employment | Well-defined law · EEOC Guidance on AI and Hiring (2021) → AI must comply with federal nondiscrimination laws and must not disproportionately disadvantage protected groups · NYC Local Law 144 mandates AI audits for automated employment decisions |
| Credit & lending | FCRA is the foundational law, with no AI-specific guidance · CFPB issued a 2021 request for information on AI in credit decisions · additional guidance from the Federal Reserve and OCC |
| Housing | Fair Housing Act (1968) remains foundational · compliance must be demonstrable even when an AI ranks or scores people · HUD 2020 guidance → automated rental and mortgage lending decisions must adhere to FHA nondiscrimination |
Exam flash
Why audits beat bias → they keep a spotlight on the issue, set expectations for builders and users, create accountability, drive process improvement when issues surface, and maintain the guardrails set at the start.
Key terms - quick answers
What is “Section 1557 (HHS OCR rule)”?
Healthcare nondiscrimination rule requiring covered entities to proactively identify and address discriminatory AI impacts.
What is “21st Century Cures Act”?
Not AI-specific; promotes advanced tech plus accessibility and transparency of health data.
What is “NAIC Model Law (2020)”?
Insurance model law: algorithms must not perpetuate unlawful or unethical discrimination.
What is “EEOC Guidance on AI and Hiring (2021)”?
AI must comply with federal nondiscrimination laws and not disproportionately disadvantage protected groups.