Illinois Becomes the Second State to Enact Broader Regulations on AI

Illinois Governor J.B. Pritzker signed House Bill 3773 into law on August 9, 2024, expanding the state’s regulations on the use of artificial intelligence in the employment process. This makes Illinois the second state to pass broad legislation on using artificial intelligence (“AI”) in employment decisions. In May 2024, Colorado enacted the Consumer Protections for Artificial Intelligence into law.

Illinois’ latest AI regulations will go into effect on January 1, 2026, introducing amendments to Article 5, Section 2 of the Illinois Human Rights Act.

What employers need to know about House Bill 3773

The Act includes several critical provisions aimed at regulating AI during the employment decision-making process to create a fairer experience for candidates:

• Discrimination prevention: Employers are prohibited from using AI in a manner that discriminates against employees based on a protected class.
• Permissible scope of use: The Act covers the use of AI in various employment-related activities, including:
  • Recruitment
  • Hiring
  • Promotion
  • Renewal of employment
  • Selection for training or apprenticeship
  • Discharge
  • Discipline
  • Tenure
  • Terms, privileges, or conditions of employment
• Prohibition on Zip Code Use: Employers are prohibited from using zip codes as a proxy for protected classes.
• Notification Requirements: Employers must notify employees that AI is being used for specified purposes, although the Act does not elaborate on the scope or details of this notice requirement.

The Illinois Department of Human Rights is granted rule-making authority to implement the Act, subject to the Illinois Human Rights Act's enforcement and remedies provisions. For more detailed information, you can find the full text for House Bill 2773 here.

Illinois may be an early adaptor to a growing trend

The Act is part of a broader trend in the United States, where states are leading regulatory efforts on AI. Starting on February 1, 2026, the Colorado Artificial Intelligence Act will also impose new regulations on developers and deployers of high-risk AI systems, such as those with algorithmic discrimination risks. Illinois, following closely behind Colorado with similar statewide industry regulations on the use of AI, may be an indicator that more laws on the use of AI will follow.

Illinois' decision highlights increasing scrutiny of the use of AI in employment decisions, creating a more pressing need for compliance with emerging laws. Employers using AI in their hiring practice should consult with their legal counsel to review any laws that might affect the use of AI during any part of the employment process.