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Artificial intelligence (AI) is becoming an integral part of business operations, including hiring and managing employees. As these systems become more involved in our daily lives, legislators are taking note.   On August 9, 2024, Illinois Governor J.B. Pritzker signed Bill 3773 into law, regulating the use of AI in employment decisions. This law joins New York City Local Law 144 and the Colorado Artificial Intelligence Act in addressing the use of AI in employment contexts.   This law goes into effect on January 1, 2026.   Key Takeaways of Bill 3773     Who is protected? The Illinois Human Rights Act prohibits discrimination for protected classes in Illinois, including discrimination based on “race, color, religion, sex, national origin, ancestry, age, order of protection status, marital status, mental or physical disability, military status, sexual orientation, pregnancy or unfavorable discharge from military service.”   Bill 3773 amends the Act by expanding its scope to include employment discrimination resulting from the use of AI.   What are the requirements? Building on the rights of the Illinois Human Rights Act, this amendment provides that employers may not use AI systems that have a discriminating effect on employees or job applicants based on any protected characteristics under the Act. Additionally, this amendment explicitly bans the use of race or zip code when used as a proxy for race in AI systems making employment decisions.   The amendment also contains a notice requirement: The employer must provide notice to the employee or applicant that the employer is using AI in their decisionmaking. This notice must be included if AI is used in the “employment-related activities” defined below, and the Illinois Department of Human Rights is tasked with providing rules on the means and time periods for providing notices.   What employers and systems does this impact? The law applies to an employer that:

1. Employs one or more employees within Illinois for 20 or more weeks per year;
2. Uses artificial intelligence systems such as generative AI models or any machine-based systems that use an input to infer how to generate outputs; and,
3. Uses those artificial intelligence systems in employment-related activities – including recruitment, selection, hiring, promotion, and more – for employees, interns, and applicants.

  If an employer satisfies these thresholds of applicability, then the law most likely applies and the employer should review whether they are complying with the law’s requirements.   Similar Laws Regulating AI in Employment   Illinois follows Colorado and New York City with legislation that restricts the use of AI in employment decisions.   Colorado Artificial Intelligence Act In May 2024, Colorado enacted the Colorado Artificial Intelligence Act, which includes parameters around “high-risk” systems. These systems include those which make “consequential decisions,” including decisions related to employment or employment opportunities. If a company is using a high-risk system, they must also adhere to specific notice, risk management, and impact assessment requirements. Additionally, they must also provide additional disclosures if the high-risk system makes an adverse decision. This includes adverse employment decisions.   New York City Local Law 144 The Illinois legislation also joins New York City Local Law 144. Signed in 2021, this law was the first legislation enacted by any state or local government that regulated the use of AI tools for employment decisions.   New York City Law 144 applies to employers and employment agencies in New York City that use “automated employment decision tools” to screen candidates or employees for employment decisions.   It requires a mandatory independent bias audit conducted within one year of using the AI tools, a summary of which must be disclosed on the employer’s website. Additionally, the employer must notify the candidate or employee that the AI system is used in connection with the decision, and shall allow a candidate to require either an accommodation or alternative selection process. The notice must disclose the job qualifications and the characteristics that the AI tool is using, and all notices must be given no less than 10 days before use.