What happens when a business uses artificial intelligence (AI) to screen candidates in five different states, each with different disclosure requirements? For many employers, the answer is a growing compliance risk. As AI become entrenched within hiring and workforce management, state and local governments introduce new rules that require employer transparency about how those tools
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What happens when a business uses artificial intelligence (AI) to screen candidates in five different states, each with different disclosure requirements? For many employers, the answer is a growing compliance risk.
As AI become entrenched within hiring and workforce management, state and local governments introduce new rules that require employer transparency about how those tools are used.
Whether you’re operating across multiple states, managing a distributed workforce, or launching a business in a state with emerging AI regulations, understanding these requirements is now an essential part of employment compliance.
Reader Disclaimer: Regulations and legislation around AI are rapidly changing. Although this article reflects the most current information available at the time of writing, new legislation, regulatory guidance, or court decisions may affect the accuracy or applicability of the information presented. Readers should verify current requirements before making business, compliance, or employment decisions.
Why Are States Regulating AI in Employment?
Artificial intelligence is currently used for a wide range of employment-related activities (with more on the way). Over the last few years, AI made splashy headlines with involvement in screening resumes, evaluating candidates, analyzing video interviews, recommending promotions, and supporting compensation decisions. While these tools can improve efficiency, the public has raised concerns. Lawmakers on both state and federal levels opened up discourse with constituents about AI transparency, bias, and fairness when it comes to employment.
In response, several states and local jurisdictions have enacted laws that require employers to disclose when AI or automated decision-making technologies influence employment decisions. Some jurisdictions also require bias audits, employee notifications, consent processes, or opportunities for human review.
For employers operating in multiple states, the challenge of understanding one AI compliance law becomes a patchwork of requirements for different locations. High-risk jurisdictions currently include California, Colorado, Illinois, New York City, and Maryland.
Which States Have AI Disclosure Requirements for Employers?
Several jurisdictions have already implemented or announced employment-related AI regulations. Key regulations are states like California, Colorado, Illinois, and Maryland. AI regulations are also found in large metro areas like New York City.
AI Disclosure Requirements in California
Beginning January 1, 2026, California’s Automated Decision-Making Technology (ADMT) regulations under the CCPA/CPRA apply to covered businesses that meet certain revenue or data-processing thresholds.
Employers using automated decision-making in employment decisions may be required to provide pre-use notices, offer opt-out options for purely automated decisions, provide access to information about how decisions are made, and conduct risk assessments. A pre-use notice deadline applies beginning January 1, 2027.
AI Disclosure Requirements in Colorado
Colorado’s SB 26-189 takes effect January 1, 2027 and applies to employers using automated decision-making technology (ADMT) for consequential decisions, including:
- hiring,
- compensation,
- promotion,
- and termination decisions.
The law requires point-of-use notices, disclosures following adverse decisions, and the opportunity for human review. It also requires both developers and deployers to retain records that demonstrate compliance for at least 3 years.
AI Disclosure Requirements in Illinois
Since 2024, Illinois has taken a particularly active approach to workplace AI regulation.
Under amendments to the Illinois Human Rights Act effective January 1, 2026 (House Bill 3773), employers using AI in employment decisions must provide notices regarding AI use to both employees and applicants. The amendments also specify that any AI, algorithms, machine learning, or other predictive tools:
- Cannot use the applicants race to disadvantage them in an interview (or hiring, promotion, employment renewal, and more)
- Cannot use an applicant’s (or employee’s) zip code as a proxy for race to screen out or disadvantage a candidate
- Cannot allow AI systems to assign risk scores to certain candidates or employment decisions.
The law also requires annual disclosures and notice language in job postings and job descriptions.
Illinois also maintains the Artificial Intelligence Video Interview Act, which requires employers to notify applicants, explain how AI is being used, and obtain written consent before analyzing video interviews with AI technology. Employers may also be required to delete interview videos upon request.
AI Disclosure Requirements in New York City
New York City’s Local Law 144 remains one of the most comprehensive AI hiring laws currently in force. Since July 5, 2023, employers using automated employment decision tools for hiring or promotion decisions must provide at least 10 days’ advance notice and conduct annual bias audits. Audit results must also be publicly available. The law applies to employers with four or more employees.
AI Disclosure Requirements in Maryland
Maryland has not yet enacted a comprehensive private-sector AI hiring law like those in Colorado or New York City, but the state’s AI framework makes clear that employers should expect increased scrutiny of AI-driven employment decisions. In 2026, Governor Wes Moore’s administration released a set of AI principles emphasizing that workers deserve a voice in how AI affects them and that human judgment should remain central to consequential decisions. “Protecting Marylanders in the Age of Artificial Intelligence” specifically highlights concerns around algorithmic discrimination, invasive workplace monitoring, and automated personnel decisions.
Maryland’s Executive Order 01.01.2024.02 and its Responsible AI Policy both address AI’s involvement in employment at state government level. Maryland has a dedicated AI Subcabinet exploring AI’s implications within state government’s functions as well as for businesses within Maryland.
Why Is AI Compliance More Challenging for Multi-State Employers?
Traditionally, employers could often standardize hiring practices across locations. AI regulation makes that strategy more difficult.
Consider a company headquartered in Texas with remote employees in California, Illinois, Colorado, and New York City. The organization may use the same applicant tracking system (ATS) and AI-powered hiring tools nationwide, but different states could impose different notification requirements, audit obligations, or employee rights.
As additional states introduce AI governance laws, employers face a growing risk of unintentionally violating local regulations even when using commonly adopted HR technology.
This challenge becomes even more complex for rapidly growing businesses that hire remote workers across state lines. A startup that began with employees in one state may suddenly find itself subject to multiple AI-related employment laws simply by expanding its workforce geographically.
What AI Compliance Risks Should Employers Watch For?
Many organizations are unaware of how extensively AI is already embedded within their HR technology stack. Resume-screening software, candidate-ranking systems, video interview platforms, assessment tools, and workforce analytics systems may all qualify as automated decision-making technologies under certain laws.
The most common AI compliance gaps include:
- Failing to notify applicants when AI is involved in hiring decisions
- Lacking documented consent processes where required
- Missing bias audit requirements
- Not maintaining required records and disclosures
- Using AI-generated recommendations without human review procedures
- Failing to update employee handbooks, privacy notices, or recruiting materials to reflect AI usage
Several jurisdictions are also emphasizing transparency and employee rights rather than banning AI outright. As a result, employers should expect increased focus on disclosure practices and documentation.
How Can Employers Prepare for Future AI Employment Regulations?
Although each jurisdiction has its own requirements, the document’s practical compliance guidance suggests several foundational best practices.
Inventory Your AI Tools / Tech Stack
Start by identifying every HR, recruiting, and workforce management platform that uses artificial intelligence, machine learning, automated decision-making, candidate scoring, or predictive analytics.
Review Vendor Relationships
Understand how technology providers use data and make recommendations. Some laws may require employers to understand and explain aspects of automated decisions to applicants or employees.
Build Disclosure Processes
Alongside your legal team, create consistent notification procedures for applicants and employees when AI tools are used in employment decisions.
Establish Human Oversight
As regulations increasingly emphasize human review rights, employers should ensure hiring and employment decisions are not processed without appropriate oversight. These human-in-the-loop discussion points should be well documented. A simple “I thought you’d taken a look at it” or blind signoffs do not remove decision-making ownership from your team.
Train HR and Hiring Teams
Recruiters, HR professionals, managers, and business leaders should understand where AI is being used and what disclosure obligations apply.
Why Employers Should Act Now
AI regulation in employment is moving quickly, and the trend is clear: lawmakers continue to demand greater transparency around how automated technologies influence workplace decisions. Employers that wait until enforcement actions occur may find themselves scrambling to adapt policies, procedures, and practices.
“As more states explore employment-focused AI legislation, organizations that establish strong compliance foundations today will be better positioned to navigate tomorrow’s regulatory landscape,” explained Tom Lindsay, Chief Innovation Officer at Vensure.
“For multi-state employers, the safest approach is often to develop AI governance practices that meet the highest applicable standards rather than trying to manage separate compliance frameworks for every location,” said Dr. Sami Mian, Chief AI Officer.
How VensureHR Can Help
As employment regulations continue evolving, employers need more than technology. They need guidance on how regulatory changes affect hiring, workforce management, compliance, and HR operations. VensureHR’s compliance experts helps clients navigate complex employment laws across state lines while supporting compliant, scalable workforce growth. Connect with our representatives to learn more about how we can help tackle compliance headaches before they become costly issues.
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