UPDATE: Two groundbreaking employment laws are now in effect in Illinois, drastically changing how employers can utilize artificial intelligence (AI) in hiring and offering significant tax credits for hiring formerly incarcerated individuals. These laws are poised to reshape the state’s workforce landscape.
The first law, under House Bill 3737, will take effect on January 1, 2024. It explicitly bans employers, employment agencies, and unions in Illinois from using AI technologies that could lead to discrimination based on protected classes during critical employment processes like hiring and promotions. This includes the prohibition of ZIP codes as proxies for such discrimination. Employers must also notify employees if AI is being utilized in employment-related decisions, marking a significant shift in transparency.
Under this law, “artificial intelligence” is defined as any machine-based system that generates outputs influencing outcomes in hiring or workplace conditions. Violations could lead to serious consequences, including civil penalties ranging from $16,000 to $70,000, along with potential lost wages for affected employees. The Illinois Department of Human Rights (IDHR) will handle complaints and determine if there is substantial evidence to support claims of discrimination.
In a crucial move to support rehabilitation and reintegration, the second law, which is already in effect, introduces tax credits for employers who hire individuals with prior incarceration. To qualify, employers can receive a tax credit of up to $7,500 for each eligible employee, capped at $1 million annually. Eligible employees must have been incarcerated in an Illinois facility and hired within five years after their release, with specific conditions regarding their criminal history.
Employers wishing to apply for these credits must register through MyTax Illinois, with applications opening on January 1. This initiative not only incentivizes hiring but also plays a role in reducing recidivism rates, providing a path for reintegration into society for many individuals.
These new laws represent a significant effort by Illinois to address both employment discrimination and support for marginalized communities. As they go into effect, the broader implications for employers and job seekers alike will unfold rapidly.
WHAT’S NEXT: Employers must prepare to comply with these regulations and consider how they will integrate AI responsibly. Additionally, organizations should stay tuned for updates on the application process for tax credits, which could offer substantial financial relief for hiring initiatives targeting formerly incarcerated individuals.
