Artificial intelligence is here to stay, but are the regulations keeping up? In 2026, there are several US state AI laws that businesses should be aware of, as they redefine what it means to use technology for decision-making. From California to Colorado, states have taken it upon themselves to enforce regulations on the use of AI in hiring, announcing laws for employers to watch out for.
There remains some uncertainty on whether they will be allowed to operate as intended. While these laws are meant to protect workers’ rights and interests, the federal government has also indicated that it is prepared to intervene and punish states that regulate AI development and usage. While the fate of these laws remains unknown, state-by-state AI regulations are still on their way.
Many controversial uses of AI are making headlines, but within the employment landscape, the reliance on AI in hiring has many concerned. Understanding the reasons for the underlying concerns of discrimination and bias, many state AI laws have been enacted by 2026, regulating the use of this advanced technology for candidate selection and employer decision-making. Some have already been enforced, while others are set to take effect early next year. Employers that don’t want to risk lawsuits and employee ire can benefit from taking these regulations into account at once.
NEW YORK CITY’S AI-BASED HIRING REGULATIONS
New York City’s “Artificial Intelligence in Hiring Law” has been in effect since July 2023, and it oversees the use of AI in hiring and workplace promotion activities. It requires employers to disclose any use of automated employment decision tools (AEDTs) in the screening of job applications or while assessing employee performance.
The matter of whether employers should use AI in these areas has been highly debated, but New York City has a head start in ensuring that employees are well aware of how their data is being used and analyzed by employers. Not only do companies need to disclose their AI use to local candidates, but they also have to facilitate an alternative option for candidates who do not want AI assessments.
CALIFORNIA’S AI HIRING LAWS FOR EMPLOYERS
Another US state leading the way for AI regulations, California has actively made changes to its policy to regulate AI use. Earlier in June, the Civil Rights Council of the California Civil Rights Department made amendments to the Fair Employment and Housing Act (FEHA) to add rules with regard to AI. These regulations went into effect in October this year, governing the use of Automated-Decision Systems (ADS) in hiring decisions.
The regulation mandates that employers avoid using any ADS tools that discriminate against job applicants and employees based on any protected categories. As a result, employers need to be extremely careful about how these tools are deployed and keep careful records on their operations and hiring processes for 4 years in case of future review.
ILLINOIS STATE’S AI LAWS FOR 2026
Illinois’ AI in Employment law comes as an amendment to the Illinois Human Rights Act, which goes into effect on January 1, 2026. It applies to all employers with one or more employees, and extends across all decision-making with relation to employees, whether in terms of hiring or promotions. The AI law asks employers to avoid using AI that allows for any discrimination of employees based on protected characteristics.
It also requires employers to inform employees when the technology is used to make decisions in relation to them. As part of this requirement, employers need to update employees on the purpose of the AI and the characteristics it will evaluate.
OTHER STATE REGULATIONS TO LOOK OUT FOR
This overview of US state AI laws gives us a brief glimpse into the changes that are on their way. In addition to these states, there are a few others to take into account.
- Colorado has made impressive progress on AI regulations, but there could be a delay in deployment. For now, the Colorado AI Act (SB 24-205) has been delayed to go into effect in June 2026, but there could be additional challenges in its deployment.
- The Texas Responsible Artificial Intelligence Governance Act (TRAIGA) doesn’t just regulate AI use in employment but covers the deployment of AI across different tasks, mandating oversight on its use for behavioral manipulation, discrimination, the creation or distribution of child pornography and unlawful deepfakes, and infringement of constitutional rights. It goes into effect on January 1, 2026.
- Maryland’s Responsible AI Policy provides guidelines on how AI systems are purchased, configured, developed, operated, or maintained by the State.
FEDERAL STANCE ON AI LAWS ENFORCED BY STATES
The White House has taken on a more unregulated stance on AI, choosing to allow tech giants to build freely without cumbersome regulations that school them on ethical considerations. In November, the governmental authorities were set to draft an executive order to preempt state AI laws via lawsuits and withholding of funds from these states. The order would allow for the establishment of an AI Litigation Task Force that could challenge state laws and counter them as unconstitutional.
Whether the federal powers will move to inhibit these state AI laws in 2026 remains to be seen, but it is best for employers to prepare for the enforcement of these laws. Ensuring that AI tools are used carefully and with supervision is essential to ensure no discriminatory decisions are allowed to slip through. It is equally important to maintain careful records of AI usage as documentation in case employees or government bodies ask to see the records at a later date.
Rather than waiting for the government to regulate AI use, employers who moderate their own usage and check for errors and limitations can successfully make the most of their AI tools without running afoul of the law.
Source – https://www.thehrdigest.com/revisiting-2026-state-ai-laws-that-aim-to-regulate-ai-in-employment/