Hunton Employment & Labor Perspectives

On August 9, 2024, Illinois Governor J.B. Pritzker signed H.B. 3773 into law, requiring all Illinois employers to notify employees and applicants when they use artificial intelligence (A.I.) to make employment decisions. The law broadly defines A.I. to mean:

a machine-based system that, for explicit or implicit objectives, infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments.” A.I. includes generative artificial intelligence.

See 775 ILCS 5/2-101(M).

Additionally, the law prohibits employers from using A.I. for recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or other terms, privileges, or conditions of employment in a way that is discriminatory based on protected classes. The new law also prohibits employers from using ZIP codes as a proxy for protected classes.

HB 3773 directs the Illinois Department of Human Rights to adopt any rules necessary for the implementation and enforcement of the law, including rules on the circumstances and conditions that require notice, the time period for providing notice, and the means for providing notice.

When does the law go into effect?

The legislation will go into effect on January 1, 2026.

Who is covered by the law?

Any person or entity that employs at least one employee in Illinois.

How did we get here?

In recent years the use of A.I. in employment has grown tremendously. Employers have used A.I. for automated candidate sourcing, resume screening, applicant testing, and performance management. As employer use of A.I. has increased, so has federal and state legislative efforts to regulate its use.

Even though there is currently no federal law regulating employer use of A.I., federal agencies have issued instructive guidance. For example, on May 12, 2022, the Equal Employment Opportunity Commission (EEOC) issued guidance, “The Americans with Disabilities Act and the Use of Software, Algorithms, and Artificial Intelligence to Assess Job Applicants and Employees.” The guidance explains how the use of A.I. may violate the Americans with Disabilities Act (ADA) and provides tips on how to avoid doing so.  In April 2024, the Department of Labor (DOL) issued DOL Field Assistance Bulletin No. 2024-1, "Artificial Intelligence and Automated Systems in the Workplace Under the FLSA and Other Federal Labor Standards" (April 29, 2024) to address potential issues under the Fair Labor Standards Act (FLSA) when employers use A.I. to perform tasks such as setting work schedules and tracking work hours. Also, on May 16, 2024, the Department of Labor (DOL) developed "Artificial Intelligence and Worker Well-being: Principles for Developers and Employers" as directed by President Biden's October 30, 2023 Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence.

Various states have also enacted laws governing employer use of A.I. In May 2024, Colorado became the first state to mandate disclosures to employees and applicants when employers use A.I. in employment decisions.  Also, Maryland regulates the use of facial recognition services to create a facial template during an applicant’s interview without a signed waiver by the applicant.

HB3773 is not Illinois’ first attempt to regulate the use of A.I. in employment decisions. Effective January 1, 2020, Illinois enacted the Artificial Intelligence Video Interview Act (AIVI Act) which requires employers to provide applicants with advance notice that they may use A.I., inform applicants how A.I. works, obtain applicant’s consent to be evaluated by A.I., and delete the video within 30 days of the applicant’s request. Under the AIVI Act, employers are prohibited from sharing applicant video except with people whose expertise is necessary to evaluate the applicant. As of January 1, 2022, employers who use A.I. analysis of video interviews as the sole method of determining whether an applicant is selected for an in-person interview must collect and report the race and ethnicity of applicants.

Finally, on May 17, 2024, the California Civil Rights Council announced a notice of proposed rule making to prevent discrimination due to the use of A.I. in employment decisions.

Takeaways

The legal landscape surrounding the regulations for employer use of A.I. in employment decisions is rapidly changing. Employers must ensure that their use of A.I. complies with current law. Employers are encouraged to consult their legal counsel to assess whether their use of A.I. complies with federal, state, and local law.