Skip to main content

AI Hiring Tool Compliance 2026: State-by-State Matrix

Which AI hiring tool laws apply to you? 2026 state laws compared: NYC bias audits, Illinois consent, Connecticut Oct 1, Colorado Jan 2027.

11 min readBy Johnie T YoungReviewed by Judith C McKee, final source checkUpdated 6 days agoLast reviewed
AI Hiring Tool Compliance 2026: State-by-State Matrix

Four US states have passed laws specifically regulating AI in hiring decisions. Three are already in effect. One takes effect in October 2026. A fifth framework follows in January 2027. If your company uses AI-assisted resume screening, video interview analysis, or automated candidate ranking, at least one of these laws likely applies to you.

At a glance: This article covers the active and upcoming US state laws regulating AI hiring tools, what each law requires, who it covers, what "AEDT" means in practice, and the federal EEOC guidance that overlays everything. Format: state-by-state compliance matrix + action checklist + vendor due diligence questions.

TL;DR: Four US states now restrict or regulate AI tools used in hiring decisions. NYC Local Law 144 requires annual independent bias audits for any automated employment decision tool (AEDT), active since July 2023; civil penalties $500 (first violation) / $1,500 (subsequent). Illinois has two laws: the AI Video Interview Act (since 2020) requires notice, an explanation and consent before AI analyzes recorded video interviews for Illinois-based jobs, and HB 3773 (since January 1, 2026) bars AI with a discriminatory effect in employment decisions and requires notice to employees. Connecticut CART Act (SB 5): the AI-is-no-defense rule effective October 1, 2026; developer and employer notice duties for tools deployed from October 1, 2027. Colorado SB 189 ADMT framework, January 1, 2027. Federal overlay: Title VII, ADA, and ADEA apply to AI hiring tools regardless of whether discrimination was caused by an algorithm. (EEOC's 2023 Technical Assistance document on AI was withdrawn January 2025; underlying statutes remain in force.)

State-by-State Compliance Matrix

Law Jurisdiction Status What it requires Who is covered
NYC Local Law 144 New York City employers Active since July 2023 Annual independent bias audit + public posting of results; candidate notification before AEDT use Any employer or employment agency using an AEDT for NYC-based employees or applicants
Illinois AI Video Interview Act (820 ILCS 42) Illinois Active since January 1, 2020 Notice, explanation of how the AI works and consent before AI analyzes a recorded video interview; limited sharing; deletion within 30 days of a request; demographic report if AI alone picks in-person interviews Employers using AI analysis of recorded video interviews for positions based in Illinois
Illinois HB 3773 (Human Rights Act amendment, P.A. 103-0804) Illinois Active since January 1, 2026 No AI with a discriminatory effect in recruitment, hiring, promotion, discipline, discharge or terms of employment; no zip codes as a proxy; notice to employees that AI is used (IDHR notice rules proposed and withdrawn in 2026) Employers with one or more employees in Illinois during 20 or more calendar weeks
Connecticut CART Act (SB 5) Connecticut No-defense rule and WARN question effective Oct 1, 2026; notice duties for tools deployed from Oct 1, 2027 Anti-discrimination ("AI is not a defense"); AEDT disclosure and pre-decision notice to applicants/employees (Oct 2027); AI question in federal WARN filings Deployers doing business in Connecticut that use a tool as a substantial factor in employment decisions there
Colorado SB 189 (ADMT framework) Colorado Effective January 1, 2027 Transparency notice when ADMT influences consequential decisions; consumer rights to request information and appeal Any company using automated decision-making that influences consequential decisions for Colorado residents
Federal civil rights statutes (Title VII / ADA / ADEA) All US employers Always in effect Disparate impact doctrine applies to AI hiring tools; employer liable for discriminatory outcomes from third-party AI vendors All US employers subject to federal anti-discrimination law

AI hiring tool compliance review under US state laws

NYC Local Law 144: What "Annual Bias Audit" Means in Practice

NYC Local Law 144 is the most operationally demanding of the five frameworks. It requires:

  1. An annual independent bias audit

The audit must be conducted by a qualified independent auditor, not the vendor, not internal HR, and not a consultant with a financial relationship to the tool. The audit must calculate:

  • Selection rates by sex, race/ethnicity, and intersectional categories
  • Impact ratios comparing the selection rate of each group to the most-selected group
  • The score distributions across demographic groups if the AEDT produces scores
  1. Public posting of results

Audit results must be posted on the employer's website, or a public URL, at least 10 business days before the AEDT is used. The posting must include the date of the audit, the source of the data, and the impact ratio results.

  1. Candidate notification

Candidates must be notified before the AEDT is used on their application. The notification must state that an AEDT is being used and must be available in the job posting or at least 10 business days before use.

Compliance gap: A 2026 New York State Comptroller audit found most employers using AEDTs have not completed the required annual audit, have not posted results publicly, or have not provided the required candidate notice. Civil penalties are $500 for first violation and $1,500 per subsequent violation. Private litigation is growing as plaintiffs' attorneys systematically identify non-compliant employers.

Practical first step: Contact your AI hiring tool vendor and ask: "Can you provide documentation of your bias audit results for NYC Local Law 144 compliance?" If they cannot, you need to commission an independent audit yourself or switch vendors.


Illinois: two separate laws

Illinois has two AI employment laws, and HB 3773 doesn't amend the older one. Our Illinois AI employment law guide has the statute text, a checklist and notice wording.

The AI Video Interview Act (820 ILCS 42), in force since January 1, 2020. An employer that asks applicants to record video interviews and uses AI analysis of them, for positions based in Illinois, must before the interview:

  • Notify the applicant that AI may be used to analyze the video and consider their fitness for the position
  • Explain how the AI works and what general types of characteristics it uses
  • Get the applicant's consent to be evaluated by the AI as described

It also limits sharing to people whose expertise or technology is needed to evaluate the applicant, requires deletion within 30 days of the applicant's request, and, since 2022, requires a race and ethnicity report to the Department of Commerce and Economic Opportunity if AI alone decides who gets an in-person interview. The act doesn't require written consent, a human review option or any specific penalty.

HB 3773 (Public Act 103-0804), in force since January 1, 2026. It amends the Illinois Human Rights Act. Using AI "that has the effect of subjecting employees to discrimination on the basis of protected classes" in recruitment, hiring, promotion, discipline, discharge or other terms of employment is a civil rights violation, as is using zip codes as a proxy for protected classes or failing to tell employees that AI is used for these purposes. The Department of Human Rights proposed notice rules on May 15, 2026 and withdrew them on June 2, 2026.

Practical compliance: give every Illinois applicant and employee a plain notice that AI is used and for which decisions; check the tool's outcomes by protected group; and where AI analyzes recorded video interviews, add the explanation and consent step before the video and a deletion request route.


Connecticut CART Act, October 1, 2026

Connecticut SB 5 became Public Act 26-15, approved May 27, 2026. Law firms call it the Connecticut Artificial Intelligence Responsibility and Transparency Act, or CART Act; the act itself is titled "An Act Concerning Online Safety". It has three employment-specific provisions:

"AI is not a defense" (October 1, 2026)

Using an automated employment-related decision technology is not a defense to a discrimination complaint. The state commission or a court may consider evidence of anti-bias testing, including its quality, recency, scope and results. If an AI hiring tool screens out a protected class at a disproportionate rate, pointing at the tool won't help.

AEDT disclosure and notice (tools deployed from October 1, 2027)

A deployer whose tool is a substantial factor in an employment decision must:

  • Disclose in plain language that an applicant or employee is interacting with the tool, unless that's obvious
  • Give a written notice before the decision with six items: that the tool is used, its purpose and the decision, its trade name, the categories of personal data and how they're assessed, the data sources, and contact details

The act has no right to contest the decision or correct the data. Developers must give deployers what they need for these notices if the tool was marketed to influence employment decisions, and can take the notices over by contract. Scheduling, safety and productivity-monitoring decisions are excluded.

WARN Act AI disclosure (October 1, 2026)

An employer that serves a federal WARN notice on the Connecticut Labor Department (29 USC 2102(a), which covers employers with 100 or more employees) must also disclose whether the layoffs relate to its use of AI or another technological change, in a form the Labor Commissioner sets.

Timeline: the no-defense rule and the WARN question took effect October 1, 2026. Developer and deployer notice duties apply to tools deployed from October 1, 2027, enforced by the Attorney General only, with a 60-day cure window through December 31, 2027. If your company uses AI in hiring or layoff decisions affecting Connecticut, document your AEDT stack and keep your adverse-impact testing on file now, and have notice templates ready before October 2027.


Colorado SB 189: January 1, 2027

Colorado's SB 189 (which replaced the more demanding SB 24-205) takes effect January 1, 2027. It uses the broader framing of "automated decision-making technology" (ADMT) rather than just employment decisions, but the employment use case is a primary focus.

Under SB 189, when ADMT influences a "consequential decision" (including employment, housing, education, credit, and healthcare), the entity using the ADMT must:

  • Give a clear and conspicuous notice before the tool influences the decision
  • Within 30 days after an adverse outcome, send a plain-language description of the decision and the role the tool played, with instructions for requesting the tool's name, version, developer and the types and sources of personal data used
  • On request, let the person correct factually incorrect or materially inaccurate personal data and ask for meaningful human review, to the extent commercially reasonable
  • Keep records showing compliance for at least three years

Compared to the old Colorado AI Act (SB 24-205), SB 189 drops the impact assessment, risk management program and annual review duties, and it adds the 30-day explanation after an adverse outcome. Until January 1, 2030, the Attorney General must allow 60 days to cure before suing, unless the violation was knowing or repeated.


EEOC AI Guidance: The Federal Overlay

Existing federal anti-discrimination law (Title VII, ADA, ADEA) applies to AI hiring tools under the same disparate impact framework that has governed pencil-and-paper tests since the 1970s. EEOC issued a 2023 Technical Assistance document specifically applying this framework to AI; that document was withdrawn in January 2025 per Executive Order 14173. The underlying statutes remain in force.

What this means in practice:

EEOC principle What it means for AI tools
Disparate impact applies If your AI screener filters out women at a higher rate than men, you have a disparate impact problem regardless of AI involvement
Employer liability for vendor tools Using a third-party vendor does not transfer liability. You are responsible for the discriminatory impact of tools you deploy
"Business necessity" defense still applies A facially neutral selection criterion with disparate impact is defensible if it is job-related and consistent with business necessity
Documentation required The same record-keeping obligations apply to AI-based hiring decisions as to traditional ones

The EEOC's 2023 Technical Assistance document noted that many AI hiring tools have not been validated for job-relatedness in the specific roles for which employers use them, a significant compliance gap that persists regardless of the document's subsequent withdrawal.


What Counts as an AEDT?

The term "automated employment decision tool" (AEDT) appears in NYC and Connecticut law. Colorado uses "automated decision-making technology" (ADMT). Illinois's Video Interview Act covers only AI analysis of recorded video interviews; HB 3773 reaches any AI used in an employment decision. These definitions partially overlap:

Tool type NYC AEDT? IL Video Interview Act? CT AEDT? CO ADMT?
AI resume screener (scores/ranks candidates) Yes No Yes Yes
AI video interview analyzer Yes Yes Yes Yes
Keyword-only resume filter (no ML scoring) Likely no No Likely no Likely no
AI job description writer (not used to filter) No No No No
AI performance review tool (for promotion) Yes No Yes Yes
Automated scheduling that prioritizes candidates Likely yes No Likely yes Likely yes
AI chatbot first-round interview screener Yes Only if it analyzes recorded video Yes Yes
LinkedIn Recruiter AI recommendations Gray zone, seek audit No Gray zone Gray zone

HB 3773 has no column because its definition is wider: a machine-based system that infers from its input how to generate outputs such as predictions, content, recommendations or decisions. Most tools in the table fit it when they're used in an employment decision about Illinois employees or applicants.

Default posture: If your tool outputs a score, ranking, or recommendation that substantially influences who advances in a hiring process, treat it as an AEDT and apply the most demanding applicable state's requirements.


Vendor Due Diligence Questions

Before using any AI hiring tool, or at your next vendor renewal, ask:

  • Do you have an independent bias audit conducted under NYC Local Law 144 standards? Can you share the results?
  • What demographic data was used in your audit, and from which dataset?
  • What is your impact ratio across sex and race/ethnicity for each tool feature?
  • Do you provide a candidate notification template for NYC Local Law 144 compliance?
  • Does your tool analyze recorded video interviews? If yes, how does it explain to applicants how the AI works and what characteristics it evaluates (Illinois AI Video Interview Act), and can it delete a video within 30 days of a request?
  • Do you provide deployers the information they need for Connecticut CART Act AEDT notices (tools deployed from October 1, 2027)?
  • Have you validated this tool for job-relatedness under EEOC standards for the specific roles we are hiring?
  • What data does your tool use in its scoring, and can you document it for state ADMT disclosure requirements?

Action Checklist

For any company using AI in hiring decisions:

  • Inventory every AI tool used in your hiring and promotion process, include vendor-embedded AI features in ATS, video interview platforms, and LinkedIn Recruiter
  • Map each tool to the state laws that apply based on where candidates and employees are located (not where your company is headquartered)
  • For NYC-based hiring: confirm annual bias audit status for each AEDT; post results publicly; implement candidate notification
  • For Illinois: give applicants and employees a notice that AI is used in employment decisions (HB 3773), check outcomes by protected group, and for AI-analyzed video interviews add notice, explanation and consent before the interview plus a deletion request route (Video Interview Act)
  • For Connecticut hires: audit for adverse impact before October 1, 2026 (anti-discrimination rules take effect); prepare AEDT disclosure templates for the October 1, 2027 employer disclosure deadline
  • Request bias audit documentation from every AI hiring vendor; flag any vendor that cannot produce it
  • Add EEOC job-relatedness validation to your vendor onboarding questionnaire
  • Update your AI acceptable use policy to specifically address hiring tool use and compliance requirements by jurisdiction

References

  1. NYC Local Law 144 (2021): nyc.gov/site/dca/about/automated-employment-decision-tools.page
  2. Illinois AI Video Interview Act, 820 ILCS 42 (effective January 1, 2020): ilga.gov; Illinois HB 3773, Public Act 103-0804 (effective January 1, 2026): ilga.gov
  3. Connecticut SB 5 (Public Act 26-15, approved May 27, 2026): cga.ct.gov
  4. Colorado SB 189 (ADMT framework, effective January 1, 2027): leg.colorado.gov
  5. EEOC Technical Assistance on AI and Employment Discrimination (May 2023, withdrawn January 2025): eeoc.gov. Underlying statutes (Title VII, ADA, ADEA) remain in force.
  6. AI tool register template 2026, track your AI hiring vendors and their compliance documentation
  7. EU AI Act Annex III high-risk checklist, EU parallel requirements for AI in employment decisions

Correction (October 13, 2026): An earlier version said Connecticut's developer obligations start October 1, 2026, that applicants get a way to contest decisions, and that the WARN rule is a Connecticut-specific WARN act with a 25-worker trigger. Developer duties cover tools deployed from October 1, 2027, there's no contest right, and the WARN question rides on federal WARN notices.

Correction (October 16, 2026): Earlier versions said Colorado SB 189 dropped the algorithmic explanation requirement and described an "appeals process". The law requires a plain-language explanation within 30 days after an adverse outcome, plus data correction and human review on request; the 60-day cure period doesn't apply to knowing or repeated violations (signed act).

Correction (October 20, 2026): Earlier versions described HB 3773 as an amendment to the Illinois AI Video Interview Act requiring written notice, written consent and a human review option for AI-analyzed video interviews of Illinois residents. They're two separate laws: the Video Interview Act (since 2020) requires notice, an explanation and consent for positions based in Illinois, with no human review option, and HB 3773 amends the Illinois Human Rights Act and covers any AI in employment decisions.

Legal disclaimer

This article is published for informational and educational purposes only. It does not constitute legal, regulatory, or professional compliance advice and should not be relied upon as such. AI governance requirements vary by jurisdiction, industry, and organizational context. Always consult a qualified legal or compliance professional before implementing policies or making decisions with regulatory implications.

About the author

Johnie T Young

Governance & Regulation Desk

Covers AI laws, regulator orders and court rulings, and what each one means for a team of ten. Posts start from the statute or the order itself, with every fact traced to a row in a source log.

  • Starts from the statute or order
  • Every fact traced to a source row
  • Dated checks on each post