AI Employment Legislation Gains Momentum Across the States

In 2024, legislative action increased substantially related to Artificial Intelligence (AI) and employment. Perhaps building on the momentum from New York City’s 2023 Local Law 144 (NYC 144), which requires a bias audit for any Automated Employment Decision Tool (AEDT) used by employers in hiring or employment decisions, several states introduced or successfully passed similar legislation this year. In fact, in the 2024 legislative session, at least forty-five states introduced AI-related bills, with thirty-one states either passing resolutions or enacting legislation.
 

Different Approaches

In May, Colorado passed the Colorado Artificial Intelligence Act (SB 205), becoming the first state to adopt comprehensive legislation regulating employers’ use of AI in making “consequential decisions.” The bill covers a wide range of AI applications, including employment, and encourages AI risk management practices long discussed by regulators at the federal and state levels. It mandates impact assessments, consumer-facing disclosures, and notifications regarding Colorado residents’ right to opt-out of certain AI uses. Although Governor Jared Polis (D) signed the bill into law, he expressed reservations in a letter, cautioning about its potential impact on the AI industry and urging lawmakers to amend provisions before the law is enforced. Businesses have also voiced strong criticism, arguing that the complex compliance requirements could stifle business activity. This law is set to take effect on February 1, 2026.

In contrast, Illinois took a narrower approach. In August, Illinois Governor JB Pritzker (D) signed HB 3773 into law, amending the Illinois Human Rights Act (IHRA) to address the risks of AI in employment. This amendment applies to employers currently using or planning to use AI, including generative AI, in decisions related to recruitment, hiring, promotions, training, discipline, or any other employment-related terms. The amendment prohibits the use of AI in a way that leads to discriminatory outcomes based on protected characteristics under the IHRA, or the use of zip codes as a proxy for protected classes. Employers must also provide notice of AI usage. Set to take effect on January 1, 2026, this law largely avoided the criticism faced by Colorado’s SB 205.

Several states, including Connecticut (SB 2), California (AB 2390), New York (S5641A), Rhode Island (H 7521), and Washington (HB 1951), introduced similar legislation but were unsuccessful in passing these measures.


Federal Activity

At the federal level, lawmakers are unlikely to introduce comprehensive AI legislation addressing employment-related issues in the near future. As a result, federal agencies are focusing more on examining how these technologies are being utilized and their workplace impact. For example, the U.S. Equal Employment Opportunity Commission has issued guidelines that emphasize key considerations for integrating automated systems into employment decision-making processes.

Additionally, this month, Senate Majority Leader Chuck Schumer (D-NY) and Senator Ed Markey (D-MA) wrote to Shalanda Young, Director of the Office of Management and Budget (OMB), urging the OMB to require all federal agencies that use AI for significant decisions to establish a civil rights office and implement additional safeguards to prevent algorithmic discrimination.


What’s next:

In the absence of federal legislation, we anticipate that lawmakers will continue proposing bills with specific provisions to regulate AI in hiring and other employment applications. We also expect a growing trend of caution among legislators regarding the swift passage of AI-related laws, driven by concerns over stifling innovation in this rapidly evolving field. This was evident in Connecticut’s comprehensive AI bill (SB 2), where Governor Ned Lamont (D) threatened to veto the legislation, citing concerns about regulating a technology whose full potential is not yet understood.

RILA has collaborated and will continue to partner with state retail associations to ensure policymakers develop a balanced regulatory framework for AI laws and regulations. RILA has also created an AI Working Group to bring together a cross section of retail executives to explore threats and opportunities of AI in the retail industry. Depending on the outcome of the 2024 elections, we could see additional bills bass states with new majorities or at the federal level where Democrats and Republicans each hold chances of controlling the House, Senate and White House.

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