Artificial intelligence is no longer a futuristic concept reserved for Silicon Valley startups. In 2026, businesses across New York City — from financial services firms on Wall Street to retail operations in Midtown — are deploying AI tools to streamline hiring, analyze data, interact with customers, and make critical business decisions. But with that rapid adoption comes an equally rapid expansion of legal obligations.
If your business uses AI in any capacity, understanding the compliance landscape is not optional. New York has positioned itself at the forefront of AI regulation, and companies that fail to keep pace risk significant penalties, litigation exposure, and reputational harm.
NYC Local Law 144: The Automated Employment Decision Tool Law
New York City’s Local Law 144, which took full effect in 2023, was one of the first laws in the nation to regulate how employers use AI and automated tools in hiring and promotion decisions. The law requires employers and employment agencies that use an Automated Employment Decision Tool (AEDT) to conduct an independent bias audit of the tool before use, publish the results of that audit on their website, and provide notice to candidates and employees that an AEDT is being used in their evaluation.
By 2026, enforcement has matured significantly. The New York City Department of Consumer and Worker Protection has issued numerous penalties, and private plaintiffs have begun filing discrimination claims grounded in biased algorithmic outcomes. If your business uses any automated screening tool — whether for resume filtering, candidate scoring, or performance evaluation — compliance with Local Law 144 is a baseline requirement, not a best practice.
The EU AI Act and Its Reach Into New York
Many New York businesses assume that the European Union’s AI Act is someone else’s problem. That assumption is wrong. The EU AI Act, which began phased implementation in 2024 and continues rolling out through 2026, has extraterritorial reach. If your company deploys AI systems that affect individuals in the EU — whether through products sold to European customers, services offered to EU-based clients, or employment decisions affecting EU workers — you are likely subject to its requirements.
The Act classifies AI systems by risk level: unacceptable, high, limited, and minimal. High-risk systems — which include AI used in employment, credit scoring, education, and critical infrastructure — face the most rigorous requirements, including mandatory risk assessments, human oversight mechanisms, transparency obligations, and data governance standards. Non-compliance can result in fines of up to 35 million euros or 7% of global annual turnover, whichever is higher.
For New York businesses with any international footprint, understanding where the EU AI Act applies to your operations is essential strategic planning.
New York State Legislative Developments
Beyond Local Law 144, New York State has been actively considering broader AI governance legislation. Several bills introduced in the state legislature address AI transparency, algorithmic accountability, and the use of AI in consumer-facing applications. While the legislative landscape continues to evolve, businesses should be preparing now for requirements that may include mandatory AI impact assessments for certain industries, expanded disclosure requirements when AI is used in consumer interactions, restrictions on AI-driven decision-making in insurance, lending, and housing, and new data protection obligations tied to AI training and deployment.
The trend is clear: regulation is expanding, not contracting. Businesses that take a proactive approach to compliance will be far better positioned than those caught reacting to new mandates.
Practical Steps for AI Compliance
Compliance with AI regulations does not require abandoning the technology. It requires thoughtful implementation and ongoing governance. Here are the steps every New York business should be taking in 2026.
First, conduct an AI inventory. You cannot comply with regulations you do not know apply to you. Map every AI tool your business uses, including third-party vendor tools, and identify what decisions those tools influence or automate.
Second, review your vendor contracts. If you are using AI tools provided by third-party vendors, your contracts must address liability allocation, data rights, audit rights, and compliance obligations. Too many businesses rely on vendor assurances without contractual protections.
Third, implement bias auditing. Whether required by Local Law 144 or undertaken as a best practice, regular auditing of AI systems for discriminatory outcomes is critical. This includes both the initial bias audit and ongoing monitoring as the AI system evolves.
Fourth, establish transparency practices. Be clear with employees, candidates, customers, and other stakeholders about when and how AI is being used. Transparency builds trust and reduces litigation risk.
Fifth, engage legal counsel with AI expertise. AI compliance sits at the intersection of employment law, data privacy, intellectual property, and regulatory compliance. A generalist approach is insufficient. You need counsel who understands both the technology and the legal frameworks governing it.
Why This Matters for Your Bottom Line
AI compliance is not merely a legal checkbox — it is a business imperative. Companies that deploy AI responsibly and in compliance with applicable law gain competitive advantages: they build trust with customers and employees, reduce exposure to costly litigation and regulatory enforcement actions, and position themselves favorably as regulations continue to tighten.
Conversely, businesses that ignore AI compliance face a growing risk profile. Discrimination claims, regulatory fines, vendor disputes, and reputational damage are all foreseeable consequences of an unmanaged AI deployment.
How Travis & De Blase Can Help
At Travis & De Blase LLP, our AI Enhanced General Counsel practice helps New York businesses navigate the complex and evolving AI regulatory landscape. We advise on compliance with NYC Local Law 144, the EU AI Act, and emerging state and federal requirements. We review and negotiate AI vendor contracts. We conduct AI risk assessments and help implement governance frameworks tailored to your business operations.
Whether you are a growing startup deploying your first AI tool or an established enterprise managing a portfolio of AI systems, we provide the litigation strength and business insight to keep you compliant and competitive.
Contact us today to schedule a consultation. Call (212) 248-2120 or email info@travisdeblase.com. Our offices are located at 40 Wall Street, Suite 2508, New York, NY 10005.
Related Practice Areas and Resources
To learn how Travis & DeBlase can help your business navigate AI compliance, visit our AI Enhanced General Counsel practice area page or review our AI Enhanced General Counsel FAQ.