Employers who recruit and employ employees in Illinois take note: the state passed a new law that will (further) regulate your use of artificial intelligence (AI) in employment decision-making. Governor J.B. Pritzker signed House Bill 3773 (AI Law) into law last month, amending the Illinois Human Rights Act (IHRA) to reach the increasingly common use of AI in personnel decisions. Here’s what you need to know:

What does the law require?

Illinois’ new AI Law has two key parts:

1. It prohibits employers from using AI in connection with “recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment” in a way that subjects an employee to any discrimination based on either their protected class or their zip code. Notably, intent is not mentioned in the law as a factor; an objectively discriminatory impact of an AI system appears to be a violation standing alone, without regard for the employer’s subjective motives.
    
2. It requires that employers notify their employees that AI is being used in connection with employment decisions. AI Law does not state when such a notice is required or what it must include, but does direct the state’s Department of Human Rights (DHR) to adopt any rules necessary for implementation of the law, including “rules on the circumstances and conditions that require notice, the time period for providing notice, and the means for providing notice.” We’ll keep watching for the DHR’s action on this.

What types of technologies does the law cover?

The law broadly defines AI as “a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments” and explicitly “includes generative artificial intelligence (GAI)” in the definition.

AI is commonly incorporated into software used by employers during the recruiting phase, when automated tools may be used to review large volumes of resumes or to screen candidates. Other technologies also exist, including products that analyze interview videos, monitor employee productivity, and can help track and manage performance on a broad scale—with new options constantly rolling out.

When do the new Illinois AI regulations take effect?

Key provisions of the law will take effect on January 1, 2026. While there is time to prepare, any businesses considering implementing employment-related AI products should plan and account for the new law’s requirements.

What businesses need to comply with the law?

The law applies to any business that has one or more employees located in Illinois for 20 or more calendar weeks during the calendar year of or preceding the violation.

What are the penalties for a violation?

Illinois’ standard procedure for enforcing the IHRA will apply to the use of AI. That means the DHR will be responsible for investigating AI-related complaints. Complainants will have the option of pursuing their claims before the Illinois Human Rights Commission (IHRC) or, after exhausting any administrative remedies, in a civil action before a circuit court.

What can you do right now?

Assess your systems. We suggest that businesses with employees in Illinois keep this new law in mind as they evaluate and implement new HR systems, and continue to assess and monitor those in use currently. Even platforms that don’t explicitly tout AI offerings may nonetheless fall under the law’s fairly broad definition of AI. Evaluating vendors and their platforms’ capabilities will continue to be a critical step for compliance teams. And once an employer decides to use an AI capability in its employment decision-making, it will need to implement the technology carefully, with an eye towards compliance with Illinois’ law and the growing number of other state and local laws across the country (which now includes New York City, Colorado, and Utah, in addition to Illinois’ already-existing law governing the use of AI in video interviews) and federal law guidance from agencies.

Takeaways

When?

Effective Jan. 1, 2026.

What?

Governs the use of AI and GAI.

• AI and GAI are defined broadly to include any machine-based system that uses inputs to infer and output:
  • predictions,
  • content,
  • recommendations,
  • decisions, or
  • outputs that simulate human-produced content when prompted with human prompts, descriptions, or queries (GAI).

• Applies to use of AI and GAI in employment decisions, including:
  • recruitment,
  • hiring,
  • promotion,
  • renewal of employment,
  • selection for training or apprenticeship,
  • discharge,
  • discipline,
  • tenure, or
  • the terms, privileges, or conditions of employment.
• Prohibits any such AI system to the extent it subjects employees to discrimination on the basis of a protected class or their zip code.
• Requires notice to employees.

Who?

Applies to any business with 1 or more employees in IL for any part of 20 or more weeks during the preceding calendar year or year leading up to the violation.

How?

Enforced through standard IHRA processes. IDHR investigates complaints. Complainants may pursue claims through IHRC or, after exhausting remedies, civil court.

As always, our Godfrey & Kahn attorneys are ready to help you when needed.