Illinois Just Made AI Part of Employment Law. Here's What Business Owners Need to Know.

This is a plain-English walk through what changed, who it covers, and the six things to check before it becomes a problem. No legalese. Just what an owner needs to do.

TL;DR: What changed in Illinois?

Illinois added artificial intelligence to its employment law. As of January 1, 2026, an amendment to the Illinois Human Rights Act says employers cannot use AI in employment decisions in a way that discriminates against a protected class, cannot use ZIP code as a stand-in for a protected class, and must tell workers and applicants when AI is being used to make those decisions.

That new law sits on top of two older Illinois laws most owners forgot they were subject to: a 2020 law about AI in video interviews, and a 2008 biometric privacy law that covers face and voice tools. Together they form the floor for using AI in hiring and HR in Illinois.

If you screen, rank, or score candidates with software, you are likely already in scope. The good news is that getting compliant is mostly process and paperwork, not a rebuild.

What is HB 3773?

HB 3773 is the bill that amended the Illinois Human Rights Act. Governor Pritzker signed it in August 2024, and it took effect January 1, 2026. It became Public Act 103-0804.

It does three things.

First, it bars employers from using AI that produces a discriminatory effect on a protected class in employment decisions. That covers a wide set of decisions: recruitment, hiring, promotion, contract renewal, who gets selected for training, discharge, discipline, tenure, and the terms and conditions of a job.

Second, it bars using ZIP code as a proxy for a protected class. ZIP codes track closely with race and income, so feeding them into a hiring model can launder discrimination through a number that looks neutral. The law shuts that door.

Third, it requires employers to notify workers and applicants when AI is used in those decisions. The Illinois Department of Human Rights was directed to write rules on the form and timing of that notice.

One point owners get wrong, so read this twice: HB 3773 is an employment law. It is not a broad Colorado-style statute that regulates AI across housing, lending, and healthcare, and it does not require formal impact assessments across every industry. The trigger is the employment relationship. If AI touches a decision about a worker or an applicant, the law applies. If it does not, this particular law does not reach it. Illinois is the second state, after Colorado, to put broad rules around AI in employment decisions, but the scope here is narrower and more specific than the headlines suggest.

If AI touches a decision about a worker or an applicant, the law applies. If it does not, this particular law does not reach it.

This is the kind of distinction that gets blurred fast once a law reaches the news cycle. It is also why we just added Illinois to AI Law Tracker, our free tool. It now covers federal, Indiana, and Illinois AI legislation, with more states coming. The point is to give owners the plain version of what a law actually says, not a scary summary that overstates it. The Illinois guide lays out all three laws below in one place.

What about AI in video interviews?

If you use AI to analyze recorded video interviews, Illinois has had a law on that since January 1, 2020. It was one of the first AI hiring laws in the country.

The requirements are straightforward. Before the interview, you have to tell the applicant that AI may be used. You have to explain, in plain terms, how the AI works and what it evaluates. And you have to get the applicant's consent. If someone does not consent, you cannot run the AI analysis on them.

The law also limits who can see the video and requires you to delete it within 30 days when the applicant asks.

A lot of owners use a hiring platform with a built-in "video assessment" feature and never realized it pulled them into this law. If that is you, the notice and consent steps are not optional, and they have to happen before the interview, not buried in a form afterward.

What about face and voice tools? (BIPA)

Illinois has had a biometric privacy law on the books since 2008. It is called BIPA, the Biometric Information Privacy Act, and it covers biometric identifiers like faceprints, voiceprints, and fingerprints.

Any AI tool that analyzes faces or voices is in scope. Think facial-analysis screening, voice-based assessments, or identity-verification tools that map a face.

BIPA requires a written policy with a retention and destruction schedule, written notice before you collect biometric data, and written consent. It restricts selling or sharing that data. It has also cost companies real money, because BIPA gives individuals a private right of action with statutory damages per violation. It is one of the most litigated privacy laws in the country, and the class-action settlements have run into the tens and hundreds of millions of dollars.

You do not want to learn about BIPA from a lawsuit. If any tool in your stack touches a face or a voice, check it against BIPA now.

Does Illinois AI law apply to my business?

Probably, if either of these is true.

You have employees in Illinois. The Human Rights Act amendment applies to any employer with at least one employee in Illinois for 20 or more calendar weeks in a year.

Or you hire, screen, or employ Illinois residents, even remotely. The trigger is having Illinois workers or serving Illinois applicants, not where your company is based. A company in Indianapolis hiring a remote worker who lives in Chicago is making an Illinois employment decision.

So the question is not "are we an Illinois company." The question is "does anyone we hire, manage, or screen live or work in Illinois." For most growing businesses, the answer is yes more often than they expect.

What do I have to do? Six steps to get ready.

You do not need a compliance department. You need to know what tools you use and tighten a few processes. Here is the order.

1. Inventory every AI tool that touches a hiring or employment decision. List your applicant tracking system, resume screeners, video interview tools, scheduling and ranking software, and anything that scores or sorts candidates. You cannot govern what you have not named.
2. Add clear notice into your application and HR process. Tell applicants and employees when AI is used in a decision. Put it where they will see it, in the application flow or the offer process, not buried in a privacy policy nobody reads.
3. Fix consent for AI video interviews. If you analyze video with AI, get specific consent before the interview, explain what the AI evaluates, and set up a process to delete the video within 30 days on request.
4. Run a discriminatory-effect review with your vendors. Ask each vendor how their tool is tested for bias and what it uses as inputs. Remove ZIP code, and close obvious proxies for protected classes. Get the answers in writing.
5. Check biometric, face, and voice tools against BIPA. If a tool touches a face or a voice, confirm you have a written policy, a retention and destruction schedule, written notice, and written consent. This is the one with private lawsuits attached, so it gets priority.
6. Update your vendor contracts. Require your AI vendors to give you documentation, support your notice and consent obligations, and run bias testing. If a tool puts you at legal risk, that needs to be the vendor's contractual problem, not just yours.

Most of this is a half-day of inventory and a few vendor emails. The cost of skipping it is a complaint, a lawsuit, or a hiring tool you have to rip out mid-quarter.

Knowing the law is the floor. Building AI your team can actually run inside that floor is the next step. If you want a read on where your business stands, our free 7 Levels of AI Proficiency assessment takes about ten minutes. And if you want to watch Illinois, Indiana, and federal AI rules in one place as they change, AI Law Tracker is free and updated as new bills move.

Related reading: Level 3: The Lieutenant (Critical Thinker).

Sources

1. Illinois Public Act 103-0804 (HB 3773), amending the Illinois Human Rights Act, effective January 1, 2026 - Illinois General Assembly
2. Artificial Intelligence Video Interview Act, 820 ILCS 42 - Illinois General Assembly
3. Biometric Information Privacy Act, 740 ILCS 14 (BIPA) - Illinois General Assembly
4. Illinois Department of Human Rights - official site
5. AI Law Tracker: Illinois AI Laws guide (plain-English companion)

Harrison Painter

Executive AI Advisor. Founder, LaunchReady.ai and AI Law Tracker.

Harrison is an Indiana AI Advisor who helps business owners and executives get their time back by building AI systems that run the work for them. Nearly 20 years in business and author of You Have Already Been Replaced by AI. Creator of The 7 Levels of AI Proficiency.

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