Illinois AI Laws 2026: Complete Guide for Businesses

Illinois has quietly built one of the most consequential state-level AI regulatory frameworks in the country. It did not happen through a single sweeping omnibus bill. It happened incrementally—through targeted statutes on hiring, biometrics, healthcare, and worker rights—and the result is a layered compliance environment that already has teeth. As of June 2026, our database tracks 231 published Illinois AI-related bills, with 56 in committee and 0 passed by at least one chamber. This guide covers the laws already in effect and the pending measures most likely to impose new obligations on businesses.

The Artificial Intelligence Video Interview Act (AIVIA) — Illinois’ Landmark Hiring Law

Illinois was the first state in the nation to regulate the use of artificial intelligence in job interviews. The Artificial Intelligence Video Interview Act (820 ILCS 42), enacted as Public Act 101-260 and effective January 1, 2020, imposes affirmative obligations on any employer that asks Illinois-based applicants to record video interviews and then uses AI to analyze those recordings when considering candidates for a position.

Core Requirements Under the Original Act

Before requesting a video interview, a covered employer must:

• Notify each applicant that AI may be used to analyze the video and assess the applicant’s fitness for the position;
• Provide the applicant with information explaining how the AI works and what general types of characteristics it uses to evaluate applicants; and
• Obtain the applicant’s consent to be evaluated by the AI program.

An employer may not use AI to evaluate any applicant who has not consented. Video recordings may only be shared with persons whose expertise or technology is necessary to evaluate the applicant’s fitness. Upon an applicant’s request, the employer must delete the interview recordings—and instruct any third-party recipients to delete their copies—within 30 days.

Demographic Reporting Obligation

An employer that relies solely on AI analysis to determine whether an applicant advances to an in-person interview must collect and report demographic data to the Illinois Department of Commerce and Economic Opportunity by December 31 each year. Required data includes the race and ethnicity of applicants who are and are not selected for in-person interviews, and of applicants who are ultimately hired. The Department analyzes the data and reports annually to the Governor and General Assembly on whether it reveals racial bias in AI use.

See our AI Transparency topic page for AIVIA compliance resources and related legislation in other states.

HB 3773: Illinois Human Rights Act AI Anti-Discrimination Amendment (Effective January 1, 2026)

House Bill 3773 (P.A. 103-0804), signed into law in August 2024 and effective January 1, 2026, amends the Employment Article of the Illinois Human Rights Act (IHRA) to regulate AI in employment decisions. It is one of the most significant AI employment laws enacted by any state.

What the Law Prohibits

The law makes it a civil rights violation for an employer to use artificial intelligence—including generative AI—in a way that has the effect of subjecting employees or applicants to discrimination on the basis of any protected class under the IHRA (which includes race, color, religion, sex, national origin, ancestry, age, marital status, physical or mental disability, military status, sexual orientation, gender identity, pregnancy, and other categories). Crucially, the law applies a disparate impact standard: discriminatory intent is not required. If the AI system produces discriminatory outcomes, the employer is exposed to liability.

The law also expressly prohibits using zip codes as a proxy for protected class characteristics within AI models used for employment decisions.

Notice Requirements

Employers must notify employees and applicants when AI is used to influence or facilitate a covered employment decision. Covered decisions include recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, and the terms, privileges, or conditions of employment.

The Illinois Department of Human Rights (IDHR) released draft implementing rules in late 2025—Subpart J: Use of Artificial Intelligence in Employment—which, if finalized, would require notices to include: the name of the AI product and its developer; the employment decisions it influences; the purpose of the system and the categories of personal data it processes; the types of job positions for which it is used; a point of contact for questions; and the right to request a reasonable accommodation. Notices must be plain-language, accessible to employees with disabilities, and available in languages commonly spoken in the workforce. Employers must preserve records of AI use and disclosures for four years.

Enforcement and Penalties

Violations are treated as civil rights violations under the IHRA. Employers in violation may face actual damages, civil penalties, attorneys’ fees, and compliance reporting obligations. The IDHR enforces the law.

See our Automated Decision-Making topic page for the full landscape of similar laws in Colorado, New York City, and other jurisdictions.

BIPA: Biometric Information Privacy Act — 2024 Amendment and 2026 Seventh Circuit Ruling

Illinois’ Biometric Information Privacy Act (740 ILCS 14), enacted in 2008, is the most-litigated biometric privacy law in the country. It requires private entities that collect biometric identifiers (fingerprints, retina or iris scans, voiceprints, facial geometry scans) or biometric information to: develop a written retention and destruction policy; inform individuals in writing of the collection and its purpose; obtain a written release before collection; and refrain from selling, leasing, or trading biometric data. BIPA provides a private right of action with statutory damages of $1,000 for negligent violations and $5,000 for willful or reckless violations.

The 2024 Amendment: Per-Person Damages (SB 2979)

After the Illinois Supreme Court’s 2023 decision in Cothron v. White Castle held that BIPA claims accrued with every individual scan—potentially creating catastrophic, per-scan exposure for employers using fingerprint time clocks or facial recognition—the Illinois General Assembly passed, and the governor signed, SB 2979 in August 2024. The amendment clarifies that repeated collection of the same biometric identifier from the same person using the same method constitutes a single violation, entitling the aggrieved party to at most one recovery per statutory subsection violated.

The April 2026 Seventh Circuit Ruling: Clay v. Union Pacific Railroad

On April 1, 2026, the U.S. Court of Appeals for the Seventh Circuit unanimously held in Clay v. Union Pacific Railroad Company (No. 25-2185) that the 2024 BIPA amendment applies retroactively to cases pending at the time of enactment. The court reasoned that the amendment is a remedial, procedural change rather than a substantive one, and therefore applies to all pending cases—not just claims filed after August 2024. This decision dramatically narrows potential damages in existing BIPA class actions and has been described as a potential “death knell” for smaller individual claims that may no longer meet the $75,000 diversity jurisdiction threshold.

BIPA compliance nonetheless remains mandatory. Companies that use AI systems involving collection of biometric data—including facial recognition, voiceprint analysis, or fingerprint authentication—must maintain written retention policies, provide advance notice, and obtain written consent. See our AI Privacy topic page for the full BIPA compliance framework.

AI in Healthcare: The Wellness and Oversight for Psychological Resources Act (HB 1806, Effective August 2025)

the governor signed House Bill 1806—the Wellness and Oversight for Psychological Resources Act—into law on August 4, 2025, making Illinois the first state to ban AI from providing direct mental health therapy. The law is effective immediately upon signing.

What the Law Prohibits

Licensed professionals (defined as individuals licensed in Illinois to provide therapy or psychotherapy services, excluding physicians) may not use AI products to:

• Make independent therapeutic decisions;
• Directly interact with clients in any form of therapeutic communication;
• Generate treatment plans or recommendations without the review and approval of the licensed provider; or
• Detect a client’s emotions or mental states.

Behavioral health providers may still use AI for administrative support functions (appointment scheduling, billing, claims processing, drafting general communications without therapeutic advice) and for supplementary support tasks such as preparing therapy notes, provided the licensed professional maintains full responsibility for all interactions, outputs, and data use. AI-generated transcripts of client sessions require informed patient consent meeting specific elements set out in the Act.

Penalties

The Illinois Department of Financial and Professional Regulation (IDFPR) enforces the Act and may impose civil penalties of up to $10,000 per violation, assessed based on the degree of harm and circumstances of the violation.

See our AI Healthcare topic page for related laws and pending legislation across states.

AI in Education: K–12 Guidance and Teacher Evaluation Bills

Illinois entered 2026 with a new law (P.A. 104-0399, 105 ILCS 5/2-3.118a, effective January 1, 2026) requiring the Illinois State Board of Education (ISBE) to develop statewide guidelines governing AI use in K–12 schools by July 1, 2026. The guidelines must address AI concepts, bias, privacy, transparency, and risk assessment, and must include instruction on the dangers of AI-generated deepfakes. ISBE issued preliminary guidance in March 2026 emphasizing that IEP teams must not rely exclusively on AI when developing individualized education programs.

Senate Bill 2909, which passed the Senate Education Committee in March 2026 and has passed one chamber, would prohibit evaluators from using AI tools to assign a numerical score or qualitative rating for any component of a teacher evaluation requiring professional judgment. If a school administrator uses an AI-assisted tool in any part of the evaluation process, the bill requires disclosure of the tool’s name and purpose to the teacher being evaluated.

Key Pending Bills: The 2026 Legislative Session

Illinois legislators introduced dozens of AI-related bills in the 104th General Assembly. The following measures are in active consideration as of June 2026 and represent the highest-risk areas for businesses to monitor. All are currently at the introduced or committee stage; none has been enacted as of this writing.

Other Notable Bills in the 2026 Session

AI Companion and Chatbot Safety

SB3384 (AI Companion Model Safety Act) would require AI companion products to detect and address suicidal ideation and expressions of self-harm, and to notify users at the start and end of each interaction that they are communicating with AI, not a human. Proposed effective date: January 1, 2027. SB2995 would require broad disclosure when individuals interact with any AI system—via chat, phone, email, or other channels—and would guarantee access to a human upon request.

Surveillance and Algorithmic Pricing

SB2255 would prohibit using surveillance data in automated systems for setting individualized prices and wages. HB4248 (Surveillance Pricing Transparency Act) would mandate disclosures for AI-generated individualized prices and allow consumers to opt out. Both remain in the introduced stage. See our Automated Decision-Making topic page for the full landscape.

Biometric Surveillance in Law Enforcement

HB5521 (Illinois Biometric Surveillance Act) would prohibit law enforcement agencies from using biometric identifiers for surveillance, including agreements with federal agencies. It builds on existing BIPA protections and extends them expressly to government actors in a law enforcement context.

Healthcare AI

SB3114 (Transparency in Downcoding Act) would prohibit automated downcoding of health insurance claims without a decision by a licensed physician, and would impose penalties for discriminatory downcoding practices. SB2993 would prohibit AI from independently prescribing medication without human oversight by a licensed pharmacist.

Data Privacy and AI Governance

SB3890 would establish a comprehensive data privacy and AI governance framework modeled on Minnesota and California law, granting consumers a universal opt-out for AI data use, rights to access, correct, delete, and transfer personal data, and requiring businesses to conduct risk assessments for high-risk AI systems. SB2994 would extend privacy protections to neural and biometric data collected by consumer devices such as health apps, sleep trackers, and wearables.

Compliance Priorities by Company Type

For a complete index of all tracked Illinois AI legislation, visit our Illinois AI laws page.

What Sets Illinois Apart

Several features distinguish the Illinois AI legal landscape from other states:

• Private right of action under BIPA. Unlike most state privacy laws, BIPA allows individuals to sue directly without proving actual harm. The 2024 amendment and the Clay ruling cap per-person exposure, but the litigation risk has not disappeared.
• Disparate impact standard under HB 3773. Illinois employers cannot defend AI use by showing they lacked discriminatory intent. If the system produces discriminatory outcomes for any protected class, the employer faces civil rights liability.
• First-in-nation AI therapy ban. HB 1806 is the first state law to categorically prohibit AI from independently providing mental health therapy. It signals that Illinois is willing to create hard prohibitions, not merely disclosure requirements, where patient safety is at stake.
• Active legislative pipeline. With more than 88 bills introduced in the current session and a dedicated Senate AI and Social Media Subcommittee, Illinois is producing AI legislation at a pace that requires continuous monitoring.

This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance specific to your situation.