As employers increasingly integrate AI into hiring, promotion, discipline, and other employment decisions, state and local regulators are accelerating efforts to impose transparency and accountability. The following two developments highlight both the direction of legislative efforts and the compliance complexity: (1) amendments to the Illinois Human Rights Act (IHRA), effective January 1, 2026, that add AI-specific notice obligations and prohibit the discriminatory use of AI in employment decisions; (2) a December 2025 audit report by the New York State Comptroller finding significant enforcement gaps under New York City’s Local Law 144 (LL144), the city’s automated employment decision tools (AEDT) law in effect since July 2023; and (3) Connecticut's SB5, a broad AI law that regulates AEDTs.

These developments arrive amid continued federal uncertainty and growing state and local activity regulating workplace AI. Employers operating nationally should expect additional requirements in 2026 and should treat AI-enabled HR tools as a regulated workflow—not a standalone technology purchase—requiring governance, documentation, and communications tailored to each jurisdiction.

Illinois: AI Amendments to the Illinois Human Rights Act (HB 3773)

Illinois’s House Bill 3773 amends the IHRA to expressly regulate employers’ use of AI in employment decisions. Effective January 1, 2026, it adds (a) an anti-discrimination standard focused on the effect of AI-driven decision-making and (b)...

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