I found the answer:
There is a Fire Department of New York regulation that applies to residential interior doors having “entry” type locks, i.e. lockable with a removable key.
This regulation does not apply to “privacy” (bathroom lock that allows it to be locked from one side and usually has a feature to defeat it from the other). The purpose of this regulation is to avoid a locked, supposedly unescapable space within the confines of a residence blocking a possible escape route in case of emergency.