Can I use AI in hiring? What employers need to know

The employer stays responsible

In Mobley v. Workday, a federal court let a nationwide group of applicants aged 40 and over proceed against the maker of an AI screening tool, reasoning that software that screens candidates on an employer’s behalf can be treated as the employer’s agent. In 2023, iTutorGroup paid $365,000 to settle the EEOC’s first case about AI in hiring: its software was set to reject older applicants automatically.

Illinois, from January 1, 2026

An employer with employees in Illinois must tell employees and applicants when AI is used in hiring, promotion, discipline or discharge, and may not use AI that has a discriminatory effect. A ZIP code may not be used as a stand-in for a protected group. The law applies to employers with as few as one employee.

Colorado, from January 1, 2027

A business that uses automated decision-making technology in employment decisions must tell people it is in use, explain an adverse outcome in plain language within 30 days, and offer a human review.

The federal picture

A December 2025 executive order asks Congress for one national standard and directs the Justice Department to challenge state AI laws. Until Congress acts, state laws stand and employers must follow them.

Practical safeguards

• List every tool that screens, ranks, scores or summarizes candidates, including features inside your applicant tracking system.
• Ask each vendor how the tool is tested for bias, and keep the answer.
• Have a person review rejections the tool recommends, at least for a sample.
• Tell candidates when AI is used, where the law requires it and preferably everywhere.
• Write the rules into your AI policy and keep records of what was used and when.