AI Hiring Laws: What Small Employers Should Know

If you use software to screen resumes, score candidates, or run interviews, some of that software is now covered by laws written specifically for AI in hiring. Most were written with large employers in mind, but few of them exempt small businesses outright. This post is a plain-English overview of the main rules as of October 2026 and the practical steps small employers commonly take. It is not legal advice. These laws are new, they are changing, and how they apply depends on where you and your candidates are. Check the current rules in your locations and talk to an employment lawyer before relying on any of this.

The baseline: existing anti-discrimination law still applies

Before any AI-specific law, federal anti-discrimination laws — including Title VII of the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act — apply to hiring decisions however they're made. Using a tool doesn't shift responsibility away from the employer. If a screening method screens out people in a protected group and isn't justified by the job, the employer can be responsible, even if a vendor built the tool. These federal laws have their own employee-count thresholds, and state laws often apply to smaller employers, so check which ones cover you.

What counts as an AI hiring tool?

Definitions differ by law, but they generally reach further than "a chatbot that interviews people." Depending on the jurisdiction, the following may be covered:

• Resume screening that scores, ranks, or filters applicants automatically.
• Job board features that sort applicants or label them as a strong or weak match.
• AI-scored or AI-run interviews, including recorded video and voice interviews.
• Online assessments and games scored by an algorithm.
• Tools that recommend which candidates to advance.

Some laws turn on how much the tool's output influences the decision, so the same software can be treated differently depending on how you use it. That's one reason the inventory step below matters.

New York City: Local Law 144

New York City's law on automated employment decision tools has been enforced since July 2023. According to a 2026 overview by the law firm Akerman, it requires employers using covered tools for hiring or promotion to have an independent bias audit each year, publish a summary of the audit, notify candidates at least 10 business days before using the tool, and provide information about an alternative process on request. Akerman notes it can apply even when a person makes the final decision based on the tool's scores or rankings.

Illinois

Illinois has two laws to know. The Artificial Intelligence Video Interview Act, in effect since 2020, covers employers that use AI to analyze recorded video interviews and includes notice, explanation, and consent requirements. Separately, House Bill 3773, effective January 1, 2026, amended the Illinois Human Rights Act. Per Akerman's summary, it bars using AI in ways that result in discrimination against protected classes, requires notifying employees and candidates when AI is used in employment decisions, and prohibits using ZIP codes as a proxy for protected characteristics.

California

California Civil Rights Council regulations on automated-decision systems took effect October 1, 2025. Akerman's summary says they make it unlawful to use such a system in a way that discriminates on protected characteristics, and describe meaningful human oversight, anti-bias testing, record retention for at least four years, and accommodations or alternative assessments as relevant to an employer's position. Akerman also notes that vendors acting on an employer's behalf can share liability.

Colorado

Colorado's Artificial Intelligence Act (SB 24-205) covers "high-risk" AI systems, including those that make or substantially influence employment decisions. Its effective date has been delayed and the law has been amended and challenged repeatedly, so what applies today may differ from what was originally passed. The original text included impact assessments, disclosures, and notice and appeal rights around adverse decisions. Check the current status and requirements with counsel if you hire in Colorado.

Other places to watch

Texas's Responsible Artificial Intelligence Governance Act took effect January 1, 2026, focused on intentional discrimination. Other states and cities have proposals in progress. If you hire remotely, the rules where your candidates live may matter as much as where your business is located.

Practical steps small employers commonly take

1. Inventory your tools. List every piece of software that sorts, scores, ranks, or interviews candidates, including features built into job boards.
2. Ask vendors direct questions. What does the tool evaluate? Has it been tested for bias, and can you see the results? Does it support candidate notices and alternative processes? Does it explain its scores?
3. Keep a human in the decision. Have a person review recommendations, including borderline candidates, before anyone is rejected, and make sure that person can override the tool.
4. Tell candidates. Where notice is required — and often where it isn't — tell candidates that AI is used and how.
5. Offer accommodations. Give candidates a clear way to request an accommodation or an alternative process.
6. Keep records. Retain job criteria, screening results, and decisions for as long as the rules in your locations require.
7. Get advice. An hour with an employment lawyer who knows your state is cheap compared with getting this wrong.

How ReqGenius approaches it

ReqGenius is designed so humans make the hiring decision. It screens every applicant against the job, AI-interviews the strongest candidates, and produces a ranked shortlist with the evidence behind each ranking, so you can see why someone ranked where they did and make your own call. You can read exactly how scores are produced on how scoring works. Whether and how a given law applies to your use of any tool is a question for your counsel.

AI hiring rules are moving quickly. Review your tools and process at least once a year, and whenever you start hiring in a new state or city.