Illinois AI law puts guardrails on AI in employment decisions

Illinois will require businesses to ensure that their use of artificial intelligence (AI) does not result in discrimination and to disclose their use of AI in employment decisions.

Effective January 1, 2026, Public Act 103-0804 will make it a violation of the Illinois Human Rights Act (IHRA) for employers to:

• Use artificial intelligence in recruitment, hiring, promotion and other employment decisions in a way that subjects employees to discrimination.
• Use ZIP codes as a proxy for the IHRA’s protected classes, such as race, religion or sex.
• Fail to notify an employee that they are using AI for employment decisions.

The penalties for violating the IHRA include back pay, attorney fees and actual damages for injury or loss.

“Companies that are using AI to make employment decisions may be using data points that are discriminatory and having adverse effects on our communities,” said one of the law’s sponsors, State Senator Javier Cervantes. “Creating a model to predict data patterns is fine, but when it’s used to single out and target workers from lower-income communities, Black and Brown communities, and many of the other underserved communities in Illinois, we cannot sit back and allow it to happen.”

The law defines AI broadly as a machine-based system that generates outputs such as predictions, content, recommendations or decisions. It also includes generative AI that can produce prose, images, audio, video and more.

Although the law does not explicitly reference job applicants, they may be covered under the umbrella of recruitment.

The law directs the Illinois Department of Human Rights to adopt regulations “necessary for the implementation and enforcement” of the new law, including rules on the circumstances and conditions that require notice, the time period for providing notice, and the means for providing notice.

Illinois becomes the second state, following Colorado, to enact a broad law regulating the use of AI in employment.