AI Frontier Institute

Establishes the New York workforce stabilization act; requires certain businesses to conduct artificial intelligence impact assessments on the application and use of such artificial intelligence and to submit such impact assessments to the department of labor prior to the implementation of the artificial intelligence; establishes a surcharge on certain corporations that use artificial intelligence or data mining or have greater than a threshold number of employees displaced by artificial intelligence of a rate of 2% of the corporation's business income base; defines data mining.

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The New York Workforce Stabilization Act (S. 1854-A) amends state labor and tax law in two main ways. First, under new Labor Law § 201-j, employers with more than 100 employees that are not small businesses must conduct an artificial intelligence impact assessment before deploying any AI system, and at least once every two years thereafter, or before any material change to the AI. Each assessment must cover the AI's objectives, its ability to meet those objectives, a summary of underlying algorithms and training data, data privacy practices, and estimates of employees already displaced or expected to be displaced by AI. Assessments must be submitted to the Department of Labor at least 30 days before implementation. Second, new Tax Law § 186-h imposes two separate 2% surcharges on a corporation's business income base: (1) a worker displacement surcharge on corporations that terminate or substantially reduce hours for a threshold number of employees (ranging from 25 employees for firms with 100–250 workers up to 250 employees for firms with 1,001 or more workers) due to automation or AI; and (2) a data mining surcharge on corporations using AI for pattern-based queries or searches of electronic databases. The displacement surcharge may be waived for businesses facing labor shortages, those using automation to protect agricultural production, or small businesses needing AI to remain economically viable. Waiver activity must be reported annually to the legislature and made publicly available. All surcharge revenues are directed to the Department of Labor for worker retraining programs, workforce development programs, or the unemployment insurance fund. The labor law provisions take effect immediately; the tax surcharges take effect January 1, 2026.

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