Background
In recent years, the growing use of artificial intelligence (AI) in employment-related decisions has raised significant ethical and legal concerns. A 2023 Pew Research Center study revealed that 71 percent of Americans oppose the use of AI in making final hiring decisions and 41 percent disapprove of its use in reviewing job applications. These concerns have prompted several states, including Illinois, to pursue legislation to regulate AI tools used in employment settings. Illinois has long spearheaded privacy-related legislation, with the Biometric Information Privacy Act (BIPA) of 2008 addressing concerns about the use of biometric data often collected by AI-driven technologies.
The Bill
Illinois’ House Bill 3773, also known as the “Limit Predictive Analytics Use” Bill, was introduced in the state’s General Assembly on February 17, 2023. After undergoing several amendments, H.B. 3773 passed the Illinois House on April 19, 2024, and the Senate on May 15, 2024. The bill was signed into law as Public Act 103-0804 on August 9, 2024, and is set to take effect on January 1, 2026. It amends Sections 2-101 and 2-102 of the Illinois Human Rights Act (IHRA) to prohibit employers from using AI in employment-related decisions if doing so results in discriminatory outcomes against protected classes. The IHRA, first signed into law in 1979, makes it a civil rights violation for employers, employment agencies, and labor organizations to engage in certain activities. For example, employers cannot refuse to hire or promote an employee or applicant on the basis of being a protected class. The law also prohibits employers from using ZIP codes as proxies for protected characteristics because of its potential to facilitate geographic or socioeconomic discrimination.
H.B. 3773 covers a wide range of employment activities, including recruitment, hiring, promotion, discharge, discipline, tenure, employment renewal, selection for training or apprenticeship, and any terms or conditions of employment. The bill forces employers, employment agencies, and labor organizations to ensure that the use of AI in these domains does not impact individuals from protected groups or result in disparate treatment. In fact, employers who fail to provide notice to an employee that they used AI for such employment purposes may be found to have violated the Act. The bill defines AI as a “machine-based system that…infers, from the input it receives, how to generate outputs such as predictions, content, recommendations, or decisions that can influence physical or virtual environments.”
Arguments in Favor
Supporters of H.B. 3773 argue that the bill increases employer accountability by requiring greater oversight of AI decision-making tools. They believe that mandating disclosure of AI use will build trust between employers and workers. Most notably, H.B. 3773 aims to prevent discriminatory outcomes that may arise from biased training data or flawed algorithms. Algorithmic hiring discrimination relies on historical data to predict future hiring outcomes, which may replicate biases. By restricting the use of ZIP codes and other data points that serve as stand-ins for race or socioeconomic status, the bill attempts to address and mitigate structural inequalities.
The law requires employers to provide notice to employees and applicants when AI is used in any part of the employment process, increasing transparency regarding the controversial technology. The Illinois Department of Human Rights will be responsible for developing rules concerning the timing, manner, and content of this notice, extending IHRA protections into the digital and algorithmic domain. To supporters, Illinois’ H.B. 3773 represents a significant advancement in worker protection, civil rights, and technological accountability.
Arguments in Opposition
Critics of H.B. 3773 have raised concerns about the breadth of the bill and the short timeline for compliance potentially being an undue burden on employers. Some have argued that the definition of AI in the bill is overly broad and lacks clear exemptions, unlike similar legislation such as the Colorado AI Act. Without specific carve-outs, the law may apply to an overly wide variety of technologies, some of which are minimally automated and may not pose significant risks.
Legal and policy analysts have also noted that while the bill does not require mandatory evaluations of AI systems, employers are strongly encouraged to conduct internal assessments to minimize the risk of legal challenges. Consequently, some employers contend that compliance will be burdensome, especially for small and mid-sized companies that lack in-house legal or technical expertise. The lack of detailed enforcement mechanisms and guidance further complicates implementation, leaving employers uncertain about how to meet the law’s requirements. Without clear guidelines, companies may suffer increased operational costs and delays in the hiring process.
Conclusion & Future Outlook
Although H.B. 3773 has been enacted and is scheduled to go into effect on January 1, 2026, its future is not entirely guaranteed. The Trump administration’s “One Big Beautiful Bill Act” (OBBBA), until recently, included a moratorium on AI regulation that, if passed, likely would have blocked state-level AI laws like H.B. 3773. While the moratorium was ultimately removed from the final version of OBBBA, the possibility of future federal preemption remains. Illinois’ passing of H.B. 3773 and H.B. 1806 (also known as the “Wellness and Oversight for Psychological Resources Act”) shows that Illinois is increasing its scrutiny of AI and will continue to pass stringent laws protecting consumers and workers. Since regulatory federal legislation tends to be modeled after state laws, Illinois may prove to be a benchmark for other states to follow when it comes to regulating AI.