Introduction
The evolving landscape of artificial intelligence (AI) and automated decision systems (ADS) in employment is prompting legislative action across various US states. These measures aim to address algorithmic discrimination, ensuring that AI tools used in hiring and employment decisions do not produce biased outcomes. This document outlines recent legislative developments in New Jersey, New York [1] [2] [3] [4], California [2] [3] [4], Colorado [1] [2] [3] [4], Illinois [1] [2] [3] [4], and Kentucky, highlighting their efforts to regulate AI and ADS in employment contexts.
Description
In January 2025 [2] [4], the New Jersey Division of Civil Rights issued guidance addressing algorithmic discrimination under the New Jersey Law Against Discrimination [2] [4], applicable to businesses and employers [2] [4]. In 2023, New York City implemented Local Law 144 [1], which mandates that employers and employment agencies conduct a bias audit of any automated employment decision tool within one year prior to its use [1]. Following this [1], New York has proposed the “New York AI Act” (S.B. 1169) [2] [4], which aims to impose requirements on employers to audit and evaluate their systems for algorithmic bias [2], with expectations for reintroduction in January 2026 [2].
California has received final approval for comprehensive regulations governing the use of artificial intelligence (AI) and automated decision systems (ADS) in employment [3], aimed at preventing discrimination in hiring and other employment decisions [3]. These regulations [1] [3] [4], which will take effect on October 1, 2025 [3], clarify that California’s existing antidiscrimination laws apply to automated tools [3], requiring employers to ensure that AI systems do not produce biased outcomes [3]. The “No Robo Bosses Act” (S.B. 7) has also been introduced in California, seeking to limit the use of ADS in employment by mandating human oversight and employee notification regarding ADS usage [2] [4].
Both New York and California’s proposed laws would enable private action against technology companies and employers using ADS [2] [4], complementing existing regulations in jurisdictions such as Colorado [4], Illinois [1] [2] [3] [4], and New York City [1] [2] [3], all targeting algorithmic discrimination in employment decisions [2]. Colorado has enacted the Colorado AI Act, effective February 1, 2026 [1], which requires employers to exercise reasonable care to prevent algorithmic discrimination [1], implement risk management policies [1], conduct annual impact assessments [1], notify employees when certain AI is utilized [1], and allow employees to appeal adverse decisions made by AI [1].
Illinois has also passed legislation (HB 3773), effective January 1, 2026 [1], prohibiting discriminatory use of AI in employment based on protected classes under the Illinois Human Rights Act and mandating notification to workers regarding AI use in various employment-related decisions [1]. While Kentucky has not yet established specific regulations for AI in the private sector [1], it has passed Senate Bill 4 [1], which governs AI use in state government [1]. This legislative movement seeks to combat “algorithmic discrimination” by addressing potential biases inherent in ADS [4], which automate parts of human decision-making [4]. These tools can inadvertently create disparities among individuals based on protected characteristics [4]. Employers may be held liable for algorithmic discrimination [4], regardless of whether a third party developed the tool or if they lack understanding of its operations [4].
A notable case is Mobley v [4]. Workday [4], Inc. [4], pending in the US District Court for the Northern District of California [4]. An older job applicant claims that Workday’s AI-driven screening tools disadvantage older applicants [4], violating the Age Discrimination in Employment Act [4], while also alleging race and disability discrimination [4]. The court has allowed the case to proceed as a nationwide collective action [4], focusing on whether the AI system disproportionately impacts applicants over 40 [4]. Research indicates that scoring algorithms lacking proper controls can adversely affect specific groups or individuals with particular characteristics [4]. As states advance their AI regulations [3], employers are advised to review the new regulations [3], assess the impact on current hiring practices [3], and ensure compliance of any AI tools in use [3], including conducting audits of their automated decision-making systems and providing training for HR and compliance teams to mitigate unintentional biases [3].
Conclusion
The legislative initiatives across various states underscore the growing recognition of the need to regulate AI and ADS in employment to prevent algorithmic discrimination. These measures are expected to have significant implications for employers, requiring them to reassess their hiring practices and ensure compliance with new regulations. As the legal landscape continues to evolve, businesses must remain vigilant in addressing potential biases in their AI systems to avoid legal liabilities and promote fair employment practices.
References
[1] https://wyattfirm.com/ai-in-the-workplace/
[2] https://natlawreview.com/article/ai-driven-employment-litigation-post-trump-ai-eos
[3] https://aitechtrend.com/california-finalizes-ai-employment-bias-regulations/
[4] https://www.jdsupra.com/legalnews/ai-driven-employment-litigation-post-5041013/
