Illinois Is About to Regulate Workplace AI. Here’s What Employers Need to Do Now

The state’s new AI notice and anti-discrimination rules are taking shape, and January 1 is closer than it looks.

Context
Illinois employers that use AI in hiring, HR, or workforce management are about to enter a new compliance era. Beginning January 1, new anti-discrimination, notice, and record-keeping obligations will take effect, and the Illinois Department of Human Rights is actively drafting the rules that will govern how this plays out in practice.

IDHR has already met with stakeholders and floated proposed regulations. While the rules are not final, the direction is clear. If AI influences employment decisions in Illinois, employers will need to explain it, document it, and ensure it does not discriminate.

Why It Matters
For business leaders, this is not a theoretical policy shift. These rules directly affect hiring pipelines, recruiting technology, HR operations, and vendor relationships. Noncompliance carries legal risk, reputational risk, and operational disruption. The organizations that prepare now will have leverage, clarity, and credibility when enforcement begins.

Core Idea
Illinois is not banning workplace AI. It is demanding transparency, accountability, and guardrails. If AI influences employment decisions, employers must be able to explain how it is used, why it is used, and how bias is prevented.

Key Compliance Framework: What the Draft Rules Tell Us

1. When Notice Is Required
Notice is required whenever AI is used to influence or facilitate covered employment decisions. This includes tools that:

• Screen or score resumes
• Analyze video interviews, facial expressions, word choice, or voice
• Use assessments, games, or tests to predict performance or traits
• Target job ads or recruiting outreach
• Evaluate or categorize applicants or employees using third-party data

If the system generates predictions, recommendations, content, or decisions that affect hiring, promotion, discipline, discharge, or other terms of employment, notice is required.

2. What Is Not Covered
Notice is not required when:

• AI is used for non-employment purposes, such as marketing content
• Software does not qualify as AI, like basic word processing or spreadsheets, and is not influencing employment decisions
• AI features exist but are not actually used to make or influence covered decisions

Capability alone is not the trigger. Use is.

3. What the Notice Must Include
Notices must be written in plain language, accessible, and available in commonly spoken workforce languages. They must disclose:

• The AI system’s name, developer, and vendor
• The employment decision the system influences
• The purpose of the system and data categories involved
• The relevant job types
• A human point of contact for questions
• Accommodation rights and how to request them
• Required anti-discrimination language from the Illinois Human Rights Act

4. How and When Notice Must Be Provided
Employers must provide notice:

• Annually to current employees
• Within 30 days of adopting or materially updating covered AI tools
• In job postings for applicants

Notice must appear in all applicable locations, including handbooks, worksites, intranets, external websites with a homepage link, and job postings.

5. Record-Keeping Requirements
AI-related notices, postings, disclosures, and records of AI use must be retained for four years. These obligations extend existing preservation duties and significantly raise documentation expectations.

What’s Next
These rules are proposed, not final. Employer groups have raised concerns about burden, especially for small businesses. Feedback is still being considered, and changes are possible.

That said, if implemented as drafted, the rules will be enforceable as of January 1. Waiting for final language is a risk. Preparation now is the safer path.

Your 5-Step Employer Action Plan

1. Inventory Your AI
Identify every tool that may qualify as AI and confirm whether its features are actually used to influence covered employment decisions.

2. Build Your Notice System
Draft compliant notices now and plan how they will be posted across physical and digital locations. Account for annual updates and tool changes.

3. Update Policies and Handbooks
Align anti-discrimination, hiring, and technology policies with the new law. Confirm written materials reflect compliance commitments and operational reality.

4. Audit for Bias and Risk
Review AI tools for unintended discriminatory outcomes. Engage legal counsel to preserve privilege and pressure-test vendors with the right questions.

5. Train Decision-Makers
Ensure managers and HR teams understand notice obligations, record-keeping requirements, and what the law allows and prohibits.

Closing Thought
Illinois is setting the expectation that workplace AI must be explainable, fair, and documented. Employers that treat this as a governance issue, not just a legal one, will be better positioned to use AI confidently and defensibly in 2026 and beyond.