Illinois Employers: AI in the Workplace Just Became a Civil Rights Issue
What You Need to Know About HB 3773 and the New Illinois Rules Governing Artificial Intelligence in Employment
If your company uses AI-powered tools to screen resumes, evaluate candidates, manage performance, or make decisions about promotions and discipline, a new Illinois law now applies to you, and the stakes are significant.
As of January 1, 2026, House Bill 3773 amended the Illinois Human Rights Act (IHRA) to make it a civil rights violation for employers to use artificial intelligence in ways that discriminate against employees or job applicants based on protected characteristics. The law also requires employers to notify workers whenever AI is being used to influence employment decisions.
Here's what Illinois employers need to understand and what steps to take now.
What the Law Actually Says
HB 3773 does two things. First, it explicitly prohibits employers from using AI that “has the effect of subjecting employees to discrimination on the basis of protected classes” under the IHRA. Second, it requires employers to provide notice to employees and applicants when AI is being used in connection with employment decisions.
The law covers a broad range of employment actions: recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, and the terms, privileges, or conditions of employment. It also specifically bans the use of zip codes as a proxy for protected characteristics — a practice that can produce discriminatory outcomes tied to race, ethnicity, or national origin even when no one intends that result.
Importantly, the discrimination does not need to be intentional. If an AI tool produces a discriminatory effect, the employer can be held liable.
Who Is Covered
The IHRA applies to any person or entity employing one or more employees within Illinois during 20 or more calendar weeks in the relevant year. That's an extremely low threshold. If you have employees in Illinois, this law very likely applies to you.
The law also reaches broadly when it comes to the AI tools themselves. HB 3773 defines “artificial intelligence” as any machine-based system that generates outputs (such as predictions, content, recommendations, or decisions) that can influence physical or virtual environments. That definition encompasses generative AI, resume-screening algorithms, chatbot-based interview tools, automated performance scoring, and much more.
The Notice Requirement
Beyond the anti-discrimination mandate, HB 3773 requires employers to notify employees and applicants when AI is being used to influence or facilitate covered employment decisions. The Illinois Department of Human Rights (IDHR) has released draft rules clarifying what this means in practice.
Under the draft rules, notice is required whenever AI is used to:
Screen resumes or rank applicants
Administer computer-based assessments or tests that measure skills, personality traits, aptitude, or cultural fit
Analyze facial expressions, word choice, or voice during video interviews
Direct job postings or advertisements to specific groups or populations
Analyze data acquired from third parties to inform employment decisions
The draft rules also specify that notices must be written in plain language, made available in languages commonly spoken by the workforce, and be reasonably accessible to employees with disabilities. Notices must include a statement that AI is being used and that the employer is not using it for a purpose that discriminates based on protected classes or uses zip codes as a proxy.
Notably, failing to provide this notice is itself a violation of the IHRA, and is separate from any discrimination claim.
What Makes This Law Different
Illinois has a track record of being ahead of the curve on regulating technology in the workplace. The state passed the Biometric Information Privacy Act (BIPA) in 2008 and the Artificial Intelligence Video Interview Act (AIVIA) in 2019, both of which imposed early guardrails on employer use of emerging technologies. HB 3773 is the next step in that progression.
Unlike the Colorado AI Act, which takes a broader, risk-based approach to AI regulation across multiple industries, Illinois HB 3773 is narrowly targeted at employment. And unlike New York City's Local Law 144, the Illinois law does not require formal bias audits or impact assessments. However, employers would be wise to conduct them voluntarily — documenting that you've proactively tested your AI tools for bias could be critical evidence in defending against a future claim.
What This Means for Employers Who Use AI Vendors
Many employers don't build their own AI tools. They purchase them from third-party vendors for recruiting, HR analytics, or workforce management. That doesn't insulate you from liability. Under the IHRA, the employer is responsible for compliance, even if the discriminatory output originates from a vendor's algorithm.
This means employers need to ask hard questions of their AI vendors: How was this tool trained? Has it been tested for disparate impact? What data does it rely on? Can you demonstrate that zip codes or other geographic proxies are not being used in a way that correlates with protected characteristics?
If your vendor can't answer those questions satisfactorily, that's a compliance risk you need to address.
Penalties and Enforcement
Violations of HB 3773 are enforced through the existing IHRA framework. That means the IDHR can investigate complaints, and employers found in violation may face actual damages, civil penalties, attorneys' fees, compliance reporting obligations, and other remedial measures. The IDHR also now has authority to impose civil enforcement penalties “to vindicate the public interest,” giving the agency additional teeth.
There is no private right of action specifically created by HB 3773, but the existing IHRA complaint process provides a clear enforcement path and patterns of AI-related discrimination claims could draw broader regulatory attention.
Steps Illinois Employers Should Take Now
The law is already in effect, and the IDHR's final rules could be published at any time. Here's what employers should prioritize:
Inventory your AI tools. Identify every AI system that touches employment decisions — including those embedded in vendor platforms for recruiting, applicant tracking, performance management, and workforce analytics.
Audit for bias. Even though the law doesn't mandate formal impact assessments, conducting them is a best practice. Test whether your AI tools produce outcomes that disproportionately affect any protected group.
Prepare your notices. Draft employee and applicant-facing disclosures that comply with the IDHR's draft rules. Make them plain-language, multilingual where appropriate, and accessible.
Review vendor contracts. Ensure your agreements with AI vendors include representations about bias testing, data practices, and compliance with applicable laws. Consider adding indemnification provisions for AI-related claims.
Train your team. Managers and HR professionals who use AI-assisted tools need to understand their obligations under the new law, including when and how to provide required notices.
Monitor IDHR rulemaking. The draft rules are not yet final. Stay current on any changes before they take effect.
The Bigger Picture
Illinois is part of a growing wave of states stepping in to regulate AI in the workplace while federal legislation remains stalled. Colorado, Texas, and California are all moving in similar directions, each with its own approach. For employers operating across state lines, this patchwork of regulations creates real complexity — but the underlying message is consistent: if you're using AI to make decisions about people's livelihoods, you're responsible for ensuring those decisions are fair.
The employers who get ahead of this by auditing their tools, documenting their compliance efforts, and building transparency into their AI practices. If done, employers will be far better positioned than those who wait for an IDHR complaint to force the issue.
This blog post is for informational purposes only and does not constitute legal advice. If you have questions about how HB 3773 applies to your business, please contact our office to discuss your specific situation.