Illinois Becomes Second State to Pass Broad Legislation on the Use of AI in Employment Decisions

Effective January 1, 2026, amendments to Article 5, Section 2 of the Illinois Human Rights Act (the "IHRA") will prohibit employers from using AI that subjects employees to discrimination on the basis of a protected class. The Act broadly defines "AI" as "a machine-based system that, for explicit or implicit objectives, infers … how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments," and includes "generative" AI.

Additional features of the Act include:

• It covers the use of AI with respect to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment.
• It prohibits employers from using zip codes as a proxy for protected classes.
• It requires employers to notify employees that AI is being used for specified purposes, but does not elaborate on the scope or details of the notice requirement.
• It grants rule-making authority to the Illinois Department of Human Rights to implement the Act.
• It is subject to the enforcement and remedies provisions of the IHRA.

The Act represents a continuing focus by Illinois to address potential bias and discriminatory effects of AI in the employment context. In 2019, Illinois passed the Artificial Intelligence Video Interview Act, requiring employers to notify job applicants and obtain consent before using AI to analyze recorded video interview submissions.

The Act is also an indication of a broader trend in the United States where states are leading regulatory efforts on AI. On February 1, 2026, the Colorado Artificial Intelligence Act will impose a duty of reasonable care on developers and deployers of high-risk AI systems, such as those that pose risks of algorithmic discrimination. As discussed in our July 2023 White Paper, New York City requires organizations using AI in employment decisions to comply with bias audit and notice requirements. Similar bills are pending in Massachusetts, New Jersey, New York, Rhode Island, Virginia, and Washington D.C.

At the federal level, on April 29, 2024, the U.S. Department of Labor warned that employers' use of AI without responsible human oversight could lead to violations of federal leave and wage/hour laws, and, this month, issued further guidance outlining best practices for developers and employers using AI in the workplace.

Given regulators' intensifying focus on the use of AI in employment practices, employers should continue to assess their employment and technology practices for compliance.