Illinois enacts law regulating employers’ use of AI in hiring decisions

On August 9, 2024, Illinois Governor JB Pritzker signed HB 3773 into law, making it the most recent state to regulate artificial intelligence (AI) use within employment. The new law will take effect on January 1, 2026, and amends the Illinois Human Rights Act by forbidding employers from deploying AI systems that discriminate against protected classes or as proxies for discrimination via ZIP codes.

Additionally, employers will now have to disclose when they use an algorithm at any stage of the employee life cycle – whether it be recruitment/hiring processes, promotions, demotions, or terminations, among other things. These changes are meant to shed light on where these systems are being used within organizations and prevent biased decision-making through them.

Illinois cracks down on AI-driven discrimination in the workplace

According to the revision of the bill, civil rights prohibit the use of any AI system that may result in bias against color, race, sex, age, or any other protected characteristic as per Illinois legislation. Employers can’t use ZIP codes as a substitute for these classes because such practices may lead to indirect discrimination.

Additionally, under this law, organizations must disclose their use of significant decision-making algorithms in employment. This goes beyond recruitment and retrenchment notices; it involves promotions and disciplinary actions taken against an employee, among other terms and conditions applicable concerning job offers made.

The notification process details will be determined through rulemaking authorized to be done by the Illinois Department of Human Rights, which shall specify how & when employees should know this information.

Illinois takes a different path from Colorado in AI employment laws

Following the signing of HB 3773, Illinois has become one of the two states that enforce regulations requiring employers to share their use of artificial intelligence (AI) in employment decisions. While following Colorado’s footsteps as the second state to require such regulations, it took a less strict direction.

Unlike Colorado, which demands broad impact assessments and bias audits and allows employees an option to appeal against any decision made by AI systems, these provisions are not included in Illinois’ law.

The aim is to prevent unfair use of AI and ensure that workers know when it affects their career prospects. The statute does not mandate routine audits or let workers challenge decisions like those driven by algorithms that were introduced by the state of Colorado for managing risks associated with this technology’s introduction into workplaces.