Chicago Business Litigation Lawyer Blog
Your hiring process probably uses artificial intelligence right now, whether you know it or not. The applicant tracking system that ranks resumes before a human reads them. The assessment platform that scores candidates on a video interview. The scheduling tool that screens out applicants who cannot work certain shifts. Vendors sold these tools as efficiency. Illinois law now treats them as a compliance obligation with teeth.
On January 1, 2026, Public Act 103-0804 took effect. It amends the Illinois Human Rights Act, 775 ILCS 5, to regulate the use of artificial intelligence in employment decisions, and it applies to recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, and the terms, privileges, and conditions of employment. That list covers nearly everything an employer does.
If the pattern of the last decade holds, the plaintiffs’ bar will treat this statute the way it treated the Biometric Information Privacy Act and the Genetic Information Privacy Act: find a technical violation, file on behalf of a class of applicants or employees, and multiply. The employers who fared best in the BIPA wave were the ones who fixed their practices before the first demand letter. This statute offers the same head start.
What the New Law Actually Prohibits
The amendment makes it a civil rights violation for an employer to use artificial intelligence that has the effect of subjecting employees or applicants to discrimination on the basis of any class protected by the Act. Race, national origin, age, sex, disability, and the rest of the familiar list now apply directly to the output of your software.
The statute singles out one practice for special mention. An employer may not use zip codes as a proxy for protected classes. A screening tool that downgrades applicants from certain neighborhoods can produce the same segregated outcome as an intentional policy, and the General Assembly closed that door by name.
The definition of artificial intelligence is broad. It reaches machine-based systems that generate predictions, recommendations, or decisions from the inputs they receive, and it expressly includes generative artificial intelligence. If a system influences who gets interviewed, hired, promoted, or let go, assume the statute covers it.
The Notice Requirement Is the Trap
The second prohibition is the one that will generate the most claims, because it does not require any discriminatory outcome at all. It is a civil rights violation for an employer to fail to notify an employee or applicant that the employer is using artificial intelligence in an employment decision.
Read that again. An employer whose AI tool works perfectly, screens fairly, and produces a diverse workforce still violates the Act if it never told applicants the tool was in use. This is the same architecture that made BIPA litigation so productive for plaintiffs: a notice and disclosure duty, violated in bulk, across every applicant who passed through the system. The Illinois Department of Human Rights has been engaged in rulemaking on the form and timing of the required notice, and employers should expect specific requirements about when and how the notice must be given.
Intent Does Not Matter
The statute targets effects, not intentions. An employer that bought a screening tool in good faith, never saw the algorithm, and never wanted to discriminate can still face liability if the tool produces discriminatory results. The vendor’s assurances are not a defense the statute recognizes. The vendor’s indemnification clause, if you negotiated one, is a contract claim for later; the civil rights charge lands on the employer.
This is where small and mid-size businesses carry more risk than the Fortune 500. Large companies have validation studies, industrial psychologists, and audit trails. A forty-employee company using an off-the-shelf hiring platform usually has a subscription agreement and a dashboard. Under this statute, both companies answer for their tools the same way.
Who Enforces It and What It Costs
Violations follow the Illinois Human Rights Act’s enforcement track. An applicant or employee files a charge with the Illinois Department of Human Rights, and the claim can proceed to the Human Rights Commission or to circuit court. Remedies include actual damages, attorney fees, costs, and the equitable relief needed to make the complainant whole. There is no liquidated damages multiplier of the kind BIPA carries, but attorney fee exposure changes settlement math quickly, and charges rarely arrive one at a time when the challenged practice is a piece of software applied to every applicant.
The Video Interview Act Still Applies
The new amendment did not replace the Artificial Intelligence Video Interview Act, 820 ILCS 42, which has governed AI analysis of video interviews in Illinois since 2020. That earlier statute requires advance notice, an explanation of how the AI works, consent before the interview, limits on sharing the video, and destruction of copies within thirty days of a request. Employers using video interview platforms now sit under both statutes at once, and compliance with one is not compliance with the other.
Five Steps to Take Now
First, inventory every tool in your hiring and personnel process that ranks, scores, screens, recommends, or filters people, and ask each vendor in writing whether the tool uses artificial intelligence as the Act defines it. The honest answer is usually yes.
Second, build the notice. Tell applicants and employees, in plain language and before the decision point, that artificial intelligence is used and for what. Watch the Department of Human Rights rules for format requirements and conform when they are final.
Third, ask vendors for adverse impact data. If a vendor cannot tell you whether its tool produces disparate outcomes by race, sex, age, or disability, that silence is your risk, not theirs.
Fourth, review your vendor contracts for indemnification, audit rights, and cooperation duties in the event of a charge. The time to negotiate those terms is before a charge exists.
Fifth, document human review. A process in which a person genuinely reviews and can override the machine’s output is both better practice and a better story to tell an investigator.
Talk to Us Before the First Charge Arrives
We have defended Illinois businesses through the BIPA wave and the GIPA wave that followed it, and the playbook on both sides of these statutes is familiar to us. If your business uses hiring or personnel software and you are not sure where you stand, or if a charge or demand letter has already arrived, call us at 630-333-0333 or visit our business litigation practice page. The consultation is free, and the conversation is a great deal cheaper than the lawsuit.