Employers are increasingly using artificial intelligence to screen resumes, score video interviews, administer automated assessments, and rank candidates before a human reviewer ever looks at an application. These tools can process high volumes of applicants faster than any human team. They can also encode bias — discriminating against protected classes in ways that are invisible to applicants and, in many cases, to the employers using them.
That gap between technological capability and legal accountability has driven a wave of state and federal legislative activity aimed at bringing algorithmic hiring under the same legal frameworks that govern human employment decisions. The result is an evolving patchwork of disclosure requirements, bias auditing mandates, and applicant rights that employers, HR professionals, and legal compliance teams are now required to navigate.
How AI Is Used in Hiring Today
The use of AI in employment decisions takes several forms. Resume screening tools apply machine learning to rank applicants against a job description, often using models trained on the profiles of prior successful employees. Video interview analysis platforms score candidates on factors derived from vocal tone, word choice, facial expression, and eye contact during recorded interviews. Skills testing platforms use adaptive testing algorithms that adjust question difficulty based on prior responses. Candidate ranking systems aggregate multiple data points into a composite score that determines which applicants advance to human review.
Each of these applications introduces a distinct set of fairness and transparency concerns. A resume screening model trained on historical hiring data may replicate past biases. A video interview analysis system that scores non-verbal behavior may disadvantage candidates with certain disabilities or from cultural backgrounds where communication norms differ. A ranking algorithm whose weights are proprietary offers no means for a rejected candidate to understand why they were not selected.
New York City Local Law 144
The most operationally significant legislation currently in effect is New York City Local Law 144, which took effect in 2023. The law requires employers and employment agencies that use automated employment decision tools in hiring or promotion decisions affecting New York City-based workers to conduct an independent bias audit of those tools before use and at least annually thereafter. Employers must also notify candidates that an automated decision tool will be used to evaluate them, and must provide summary information about the tool's bias audit results upon request.
The law defines an automated employment decision tool as any computational process that issues a simplified output — including a score, classification, or recommendation — that is used to substantially assist or replace discretionary decision-making in employment decisions. Enforcement includes civil penalties for violations. The law represented the first mandatory bias audit requirement for automated hiring tools in the United States.
Illinois AI Video Interview Act
Illinois passed the Artificial Intelligence Video Interview Act in 2019, one of the earliest AI hiring transparency laws in the country. The law requires employers who use AI to analyze video interviews to notify applicants before the interview that AI analysis will be used, explain what AI characteristics are evaluated, and obtain applicant consent. Employers are prohibited from sharing video recordings analyzed by AI with third parties other than the AI vendor, and must delete recordings within 30 days of a request by the applicant.
The Illinois law is narrower than New York City's — it applies specifically to video interview AI and does not require bias audits — but it established foundational consent and disclosure principles that influenced subsequent state legislation.
Federal Proposals and EEOC Guidance
At the federal level, several bills have been introduced in Congress addressing algorithmic hiring transparency, though none had advanced to passage as of mid-2025. The proposed legislation generally tracks the themes established in state laws: mandatory disclosure to applicants when AI is used in hiring decisions, bias testing requirements, and applicant rights to explanation and appeal.
The Equal Employment Opportunity Commission has issued technical guidance clarifying that Title VII of the Civil Rights Act and the Americans with Disabilities Act apply fully to automated employment decision tools. Employers who use AI hiring tools are legally responsible for discriminatory outcomes those tools produce, regardless of whether the employer designed the algorithm. This framing is significant: it establishes that third-party AI vendor tools do not insulate employers from civil rights liability.
What Employers Must Disclose Under Existing Law
In jurisdictions with applicable disclosure requirements, employers must provide applicants with notice that AI tools will be used in the evaluation process, often before the evaluation begins. In New York City, this notice must be provided before the use of an automated employment decision tool. The notice must identify the characteristics the tool will use to evaluate candidates. In Illinois, employers must explain what attributes the AI analyzes in video interviews.
Beyond disclosure, the New York City law creates audit publication requirements: employers must post a summary of the most recent bias audit on their website. This public accountability mechanism is a departure from purely private disclosure requirements and reflects a policy judgment that aggregate bias data is a matter of public concern, not just individual applicant concern.
Challenging AI-Based Hiring Decisions
Applicants who believe they were rejected due to a discriminatory automated process have several potential legal avenues. Under Title VII, a disparate impact claim can be brought if an AI tool has a statistically significant adverse effect on a protected class without business justification. Under the ADA, applicants may be entitled to reasonable accommodations in AI-assessed processes, and tools that screen out disabled applicants without job-relatedness justification may violate the Act.
Practically, applicants often lack the information necessary to identify whether AI discrimination occurred. The disclosure and audit requirements in state laws address this gap partially — an applicant who knows AI was used and can access bias audit results has more basis to assess whether their rejection may have been affected by algorithmic discrimination than an applicant who had no idea an AI system was involved. As state legislatures continue their pattern of addressing gaps in federal consumer and civil rights protections, the trend toward expanded applicant rights in AI hiring is likely to continue.
Implications for HR and Legal Compliance Teams
Employers operating in jurisdictions with AI hiring laws face an immediate compliance checklist: inventory all automated tools used in hiring and promotion; confirm whether applicable state or local disclosure and audit requirements apply; obtain bias audits from qualified independent auditors; establish applicant notice procedures; and train HR staff on both the disclosure obligations and the audit result reporting requirements.
Legal compliance teams should also review vendor contracts for AI hiring tools to ensure the vendor will cooperate with bias audit requirements and will not use applicant data in ways that conflict with disclosure obligations. Vendor contracts that lack audit cooperation provisions may need to be renegotiated as state AI hiring laws proliferate.
Frequently Asked Questions
Does New York City Local Law 144 apply to remote workers?
The law applies to automated employment decision tools used to evaluate candidates for positions based in New York City, including remote positions where the role is considered NYC-based. Employers should review the guidance issued by the New York City Department of Consumer and Worker Protection for specific jurisdictional scope determinations, as the application to remote roles has been an area of ongoing clarification.
Is a bias audit required before using any AI hiring tool?
Under New York City Local Law 144, yes — employers must have an independent bias audit conducted before using a covered automated employment decision tool. The audit must be performed by a qualified independent auditor and results must be published on the employer's website. Other jurisdictions currently require disclosure without independent audit; the audit requirement remains distinctive to the New York City law as of mid-2025.
Can an applicant request to opt out of AI evaluation?
Opt-out rights vary by jurisdiction and tool type. Illinois law gives applicants the right to request that their video interview be reviewed by a human rather than AI. New York City's law does not provide a general opt-out right but requires employers to provide an alternative selection process for applicants who request one. Whether and how opt-out rights apply to specific tools should be confirmed under applicable state and local law.
What happens if an AI tool used for hiring produces biased results?
Under federal law, employers are liable for discriminatory outcomes produced by AI tools they use, regardless of whether the employer designed the algorithm. Disparate impact claims under Title VII can be brought based on statistical evidence of adverse effect on a protected class. ADA claims may arise if the tool screens out qualified disabled applicants. The employer's use of an outside vendor does not transfer this liability to the vendor.