Illinois Passes New Law to Address AI in the Workplace

September 17, 2024

What happened?

On August 9^th, 2024, Illinois Governor J.B. Pritzker signed a law into effect to address employers’ use of artificial intelligence (“AI”). Illinois joins New York City and Colorado in passing laws governing employers’ requirements when using AI to make decisions regarding employment.

Under the new Illinois law, HB 3773, AI is defined as “a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, recommendations, or decisions that can influence physical or virtual environments”. Due to the ambiguity of this definition, it could potentially extend to rules-based machine systems that may not actually use AI to create outputs.

HB 3773 Requirements

HB 3773 includes two key requirements for employers when using AI employment-related decisions:

• First, under the new law, employers cannot “use AI that has the effect of subjecting employees to discrimination on the basis of protected classes under the Act or to use zip codes as a proxy for protected classes”. HB 3773 specifically references zip codes; however, it is implied that employers should not use other variables that could be a proxy for a protected category.
• Second, the new law requires employers to notify an employee when AI is used in the “recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment”.

HB 3773 also amends the Illinois Human Rights Act (“the Act”) and classifies the requirements above as potential civil rights violations by employers. The Illinois Department of Human Rights will adopt an additional rule regarding the implementation and enforcement of HB 3773, including “rules on the circumstances and conditions that require notice, the time period for providing notice, and the means for providing notes.”

The new law will take effect January 1^st, 2026. It applies to employers based in Illinois who have one or more employees. It’s worth noting that HC 3773 “does not expressly impose liabilities on employment agencies”.

What does this mean for me?

Firms who are under the scope of HB 3773 and currently use AI tools in their employment decision-making processes should remain alert for updated communication and new guidelines from the Illinois Department of Human Rights regarding the notice requirements included in the law. Additionally, firms should take this opportunity to extensively review their use of AI in employment-related items to determine if their current practices fall under any of the prohibited activities included in the new law. Firms should also remember that services provided by vendors may also fall under the prohibited activities.

Firms should be proactive to ensure they remain up to date with regulatory expectations, best practices, and quickly evolving technology. If you have any questions about AI or related issues, let us know and one of our regulatory experts will contact you soon.