AI Hiring Laws for Recruiters: NYC, Illinois & Colorado (2026)

By The Professions Cloud Editors Updated October 13, 2026 · 6 sources · 3 min read

Prices and facts checked October 13, 2026. We don't accept payment for rankings.

Short answer: if AI helps decide who advances in your hiring process, three laws matter most in 2026. New York City requires a yearly independent bias audit, a public summary of it, and notice to candidates 10 business days in advance. Illinois has, since January 1, 2026, made it a civil-rights violation to use AI in a way that discriminates, or to use it without telling candidates. Colorado replaced its original AI Act with a narrower law expected to take effect January 1, 2027.

New York City: Local Law 144

NYC's law covers employers and employment agencies using an "automated employment decision tool" (AEDT) for candidates or employees in the city. Before using one, you need (NYC DCWP):

• a bias audit of the tool conducted within one year before use
• a publicly available summary of the audit results
• notice to candidates or employees. City guidance says this must be given 10 business days before the tool is used.

Enforcement by the Department of Consumer and Worker Protection began July 5, 2023. Note that recruiting agencies are covered, not just employers.

Illinois: HB 3773 (in force January 1, 2026)

Illinois amended its Human Rights Act so that employers may not use AI in ways that discriminate against protected classes, intentionally or not, and may not use zip codes as a proxy for protected characteristics. Employers using AI for covered decisions must notify applicants and employees. Illinois was the second state, after Colorado, to legislate on algorithmic discrimination in employment (Reed Smith). Covered decisions include recruitment, hiring, promotion, training selection, discipline and discharge (Fisher Phillips).

Enforcement runs through the Illinois Department of Human Rights, after which individuals can sue for remedies including uncapped compensatory damages and attorneys' fees.

The catch: the detailed notice rules aren't settled. The department published draft regulations in May 2026 and withdrew them in June 2026, with no refiling date announced (Beancount guide). The law itself is in force, so give clear notice now rather than waiting for the rules.

Colorado: from SB 24-205 to the 2027 replacement

Colorado's original 2024 AI Act was delayed and never took effect as written. In May 2026 the legislature passed a replacement focused on automated decision-making technology that materially influences "consequential decisions," including employment, expected to take effect January 1, 2027 (Davis+Gilbert). For deployers such as employers, the new law requires:

• prior notice before using the technology for a consequential decision
• for adverse decisions, an explanation and a way to request information about the tool and its data
• human review and reconsideration on request

The original law's impact assessments and governance programs were dropped.

What this means for recruiters

Checklist before you use AI to screen candidates

1. Map every AI tool in your process, including features inside your ATS.
2. Ask vendors whether a tool scores, ranks or filters candidates, and for their bias audit.
3. NYC roles: have the audit within the past year, publish the summary, and give 10 business days' notice.
4. Illinois candidates: give clear notice of AI use, and drop zip code as a screening input.
5. Colorado (2027): build prior-notice and adverse-decision explanation steps now.
6. Keep a human decision-maker for rejections, and document it.

Choosing tools? See our guide to the best AI sourcing tools for recruiters.

FAQ

Do these laws apply to recruiting agencies?

NYC's law explicitly covers employment agencies. Illinois' law applies to employers, and agencies acting on their behalf should expect clients to require compliance.

Is ChatGPT screening of resumes covered?

If you use it to score or rank candidates and it substantially drives who advances, it can be an automated decision tool, with the obligations above.

What happened to the Colorado AI Act?

The 2024 law was delayed and then replaced in May 2026 by a narrower automated decision-making law expected to take effect January 1, 2027.

Changelog: Oct 13, 2026: first published.