Guide

AI Hiring Laws in Indiana: What Employers Need to Know

Indiana employers using AI in hiring face new federal and state requirements for disclosure, bias testing, and candidate rights. This guide covers what is proposed, what is already law in neighboring states, and how to prepare.

Last updated March 21, 2026 · Ask a question about this topic →

Current Landscape: Federal and State Hiring AI Bills

AI-powered hiring tools have become one of the most scrutinized areas of AI regulation. Employers across Indiana are using automated resume screening, AI-scored video interviews, predictive analytics for candidate selection, and chatbot-driven initial assessments. Each of these tools is the subject of proposed legislation at both the federal and state level.

At the federal level, multiple bills would require employers to disclose AI use in hiring, provide explanations to rejected candidates, and conduct bias audits. At the state level, the Indiana General Assembly has introduced bills mirroring these requirements with Indiana-specific enforcement. Illinois has already enacted the AI Video Interview Act, which directly affects Indiana employers who hire across state lines.

The common thread across all proposed legislation is transparency: candidates have a right to know when AI is evaluating them, and employers have an obligation to ensure these tools do not discriminate.

Key Takeaway

The common thread across all proposed hiring AI legislation is transparency: candidates have a right to know when AI is evaluating them, and employers must ensure these tools do not discriminate.

Related Bills

FederalIn Committee
Low Risk

S 5055

Senator Mark Warner (D-VA) introduced this bill to create a National Workforce Transition Board that would fund training and education for workers displaced by AI and emerging tech. It's an advisory and grant-making body, not a regulatory one, so it doesn't impose new rules on how companies use AI.

Workforce Development and EdTechManufacturingRetail

Last action: Jul 21, 2026

FederalIn Committee
Medium Risk

HR 9715

Rep. David Schweikert (R-AZ) introduced this bill to explicitly allow the use of artificial intelligence in arbitration proceedings. It would greenlight AI tools acting as arbitrators or assisting in dispute resolution, a practice currently in legal gray area under federal arbitration law.

Legal ServicesLegal TechFinancial Services

Last action: Jul 15, 2026

IllinoisEnacted
Medium Risk

HB1700

Illinois HB1700, sponsored by Rep. Ann Williams and enacted as Public Act 104-0477, requires wind, solar, and battery storage projects seeking High Impact Business tax benefits to be built under project labor agreements. It also revamps rules for distributed energy storage rebates, virtual power plants, utility data sharing, and state authority to override local siting denials for clean energy facilities. This bill contains no AI-specific provisions.

Renewable Energy DevelopmentBattery Energy StorageElectric Utilities

Last action: Jun 26, 2026

FederalIn Committee
Medium Risk

S 4825

Senator Bernie Sanders introduced this bill to slap a new federal excise tax on 'systemically important AI activity,' which is his way of taxing the biggest AI players (think frontier model developers like OpenAI, Google, and Anthropic). It uses the tax code rather than direct regulation to discourage large-scale AI deployment and likely fund worker or social programs.

Foundation Model DevelopersCloud ComputingEnterprise SaaS

Last action: Jun 18, 2026

FederalIn Committee
Medium Risk

HR 9352

Rep. Steven Horsford (D-NV) introduced this bill to require employers to disclose when AI is used in decisions that affect workers, including hiring, firing, promotions, and job restructuring. It aims to give workers and regulators clearer visibility into how AI is reshaping employment before layoffs or reassignments happen.

HR TechStaffing and RecruitingEnterprise Software

Last action: Jun 18, 2026

FederalIn Committee
High Risk

S 4833

Senator Ed Markey's bill would ban employers from using AI and automated decision systems to make high-stakes employment decisions like hiring, firing, promotions, and discipline without meaningful human oversight. It targets the growing use of algorithmic tools that screen resumes, monitor workers, and rank employee performance. The bill sits in the Senate HELP Committee and would create new federal worker protections around workplace AI.

HR TechStaffing and RecruitingWarehousing and Logistics

Last action: Jun 18, 2026

Automated Resume Screening Requirements

Automated resume screening is one of the most widely used AI hiring tools. Software that scans resumes for keywords, scores candidates based on qualifications, or ranks applicants using machine learning is used by employers of all sizes across Indiana.

Proposed legislation would require employers to disclose when automated screening is used, provide rejected candidates with notice that AI was involved in the decision, and in some cases offer a human review option. Several bills also require that screening algorithms be audited for disparate impact based on race, gender, age, disability, and other protected characteristics.

Indiana employers using automated screening should document which tools they use, how those tools make decisions, and what data they process. This documentation will be required under most proposed bills and is a best practice regardless of legislation.

Related Bills

FederalIn Committee
High Risk

HR 9734

Rep. Herbert Conaway (D-NJ) introduced this bill to restrict how Medicare Advantage plans use AI to deny prior authorization requests. It would require human clinician review of AI-flagged denials and set new transparency and oversight rules for insurers using algorithms to approve or reject care.

Health InsuranceHealthcare AIMedicare Advantage Plans

Last action: Jul 16, 2026

FederalIn Committee
Medium Risk

HR 9715

Rep. David Schweikert (R-AZ) introduced this bill to explicitly allow the use of artificial intelligence in arbitration proceedings. It would greenlight AI tools acting as arbitrators or assisting in dispute resolution, a practice currently in legal gray area under federal arbitration law.

Legal ServicesLegal TechFinancial Services

Last action: Jul 15, 2026

FederalPassed Chamber
Low Risk

HR 8881

Rep. Brad Finstad's bill would require the Small Business Administration (SBA) to develop a strategy for using AI internally to improve how it serves small businesses. It's an internal government modernization bill, not a regulation on private companies or their AI tools.

Government TechnologyAI Vendors and ContractorsSmall Business Lending

Last action: Jun 24, 2026

FederalIn Committee
High Risk

S 4833

Senator Ed Markey's bill would ban employers from using AI and automated decision systems to make high-stakes employment decisions like hiring, firing, promotions, and discipline without meaningful human oversight. It targets the growing use of algorithmic tools that screen resumes, monitor workers, and rank employee performance. The bill sits in the Senate HELP Committee and would create new federal worker protections around workplace AI.

HR TechStaffing and RecruitingWarehousing and Logistics

Last action: Jun 18, 2026

IllinoisPassed Chamber
Medium Risk

SB 2909

Illinois SB 2909, led by Senator Christopher Belt, would prohibit school districts from using artificial intelligence as the sole basis for evaluating teacher performance. AI can still assist in evaluations, but a qualified human evaluator must make the final call. The bill has passed both chambers and is headed to the governor.

EdTechK-12 EducationHR Tech

Last action: May 27, 2026

IllinoisIntroduced
High Risk

SB 3114

Illinois SB 3114, introduced by Sen. Dave Koehler with broad bipartisan support, would require health insurers to disclose when they use AI or algorithms to 'downcode' medical claims (paying providers less than what was billed by reassigning codes). Insurers would have to explain the downcoding decision, identify whether AI was involved, and give providers a way to appeal.

Health InsuranceHealthcare ProvidersHealthcare AI

Last action: May 27, 2026

AI Interview and Assessment Tool Regulations

AI-powered video interviews that analyze facial expressions, voice patterns, word choice, or body language are subject to some of the strictest proposed requirements. Several federal bills would require explicit candidate consent before AI analysis of video interviews, and Illinois has already banned AI video interview analysis without consent.

Beyond video interviews, AI-driven skills assessments, personality tests, and cognitive ability evaluations are also targeted. Proposed requirements include providing candidates with information about what the AI measures, how it scores responses, and what weight the AI assessment carries in the overall hiring decision.

Indiana employers using any form of AI-assisted assessment should review their vendor contracts to confirm the tools comply with proposed requirements. Vendors should be able to demonstrate bias testing results and explain how their algorithms work.

Related Bills

FederalIn Committee
Medium Risk

HR 8893

Rep. Valerie Foushee (D-NC) introduced this bill to require NIST to develop standards for identifying AI-generated content and detecting deepfakes, particularly synthetic audio, video, and images that could deceive consumers. It directs federal agencies to create guidelines for watermarking and content provenance, pushing platforms and AI developers toward clearer disclosure of synthetic media.

Generative AISocial Media PlatformsAdvertising and Marketing

Last action: Jul 7, 2026

IllinoisEnacted
Medium Risk

SB 315

Illinois just enacted SB 315, the Artificial Intelligence Safety Measures Act, sponsored by Senators Mary Edly-Allen and Sue Rezin. It requires the largest AI developers (companies with over $500M in revenue training massive 'frontier' models above 10^26 compute operations) to publish safety frameworks, report critical incidents within 72 hours, and undergo annual third-party audits. Penalties reach $1M per first violation and $3M for repeat violations, enforced solely by the Illinois Attorney General.

Foundation Model DevelopersCloud ComputingEnterprise AI Software

Last action: Jul 6, 2026

FederalIn Committee
Medium Risk

HR 9578

Representative Josh Gottheimer (D-NJ) introduced this bill to require that all AI-generated content, whether text, images, audio, or video, be labeled as AI-generated through embedded metadata or similar technology. It aims to help consumers and platforms distinguish real content from synthetic content amid growing deepfake and generative AI concerns.

Generative AI ProvidersSocial Media PlatformsMarketing and Advertising

Last action: Jul 2, 2026

FederalIn Committee
Medium Risk

S 4915

Senator Brian Schatz (D-HI) introduced a federal bill requiring clear labels on AI-generated content, including text, images, audio, and video. If passed, companies deploying generative AI would need to disclose when content is machine-made, aiming to help consumers spot synthetic media and deepfakes.

Generative AI DevelopersSocial Media PlatformsAdvertising and Marketing

Last action: Jun 24, 2026

FederalIn Committee
High Risk

S 4833

Senator Ed Markey's bill would ban employers from using AI and automated decision systems to make high-stakes employment decisions like hiring, firing, promotions, and discipline without meaningful human oversight. It targets the growing use of algorithmic tools that screen resumes, monitor workers, and rank employee performance. The bill sits in the Senate HELP Committee and would create new federal worker protections around workplace AI.

HR TechStaffing and RecruitingWarehousing and Logistics

Last action: Jun 18, 2026

FederalIn Committee
Low Risk

S 4762

Senator Rick Scott's bill would require the Department of Homeland Security to regularly assess terrorism risks posed by generative AI tools like ChatGPT, including how bad actors could use them for attack planning, propaganda, or weapons development. It does not impose direct compliance rules on private companies, but it sets the stage for future regulation by formally identifying AI terrorism threats.

Generative AICloud InfrastructureDefense and National Security

Last action: Jun 11, 2026

Employee Monitoring and Workplace AI

AI is not just used in hiring. Indiana employers increasingly use AI to monitor employee productivity, analyze communications, track location, and flag performance issues. Several proposed bills extend AI transparency requirements to the entire employment relationship, not just the hiring process.

Key proposals include requiring employers to disclose all AI monitoring tools in use, limiting the types of data that can be collected, and giving employees the right to access data collected about them. Some bills also restrict the use of AI in termination and disciplinary decisions, requiring human review before adverse employment actions based on AI analysis.

Indiana employers should inventory all AI tools used across the employee lifecycle, from recruiting to onboarding to ongoing management to separation. This inventory is the starting point for compliance with any workplace AI legislation.

Related Bills

FederalIn Committee
Low Risk

S 5055

Senator Mark Warner (D-VA) introduced this bill to create a National Workforce Transition Board that would fund training and education for workers displaced by AI and emerging tech. It's an advisory and grant-making body, not a regulatory one, so it doesn't impose new rules on how companies use AI.

Workforce Development and EdTechManufacturingRetail

Last action: Jul 21, 2026

FederalIn Committee
Low Risk

HR 9686

Rep. Zach Nunn (R-IA) introduced the FARM AI Act to push the USDA to develop and support AI tools specifically for American agriculture, covering things like crop monitoring, livestock management, and supply chain optimization. It's a pro-innovation bill focused on funding, research, and coordination rather than restricting AI use. Currently sitting in the House Agriculture Committee.

AgTechFarm Equipment ManufacturingFood Supply Chain & Logistics

Last action: Jul 14, 2026

FederalIn Committee
Low Risk

HR 5584

Rep. Thomas Kean's LIFT AI Act directs federal agencies (likely NIST and related bodies) to study and support AI workforce development and adoption, focusing on training and capacity-building rather than restricting AI use. It's currently sitting in the House Science Committee with no compliance mandates for private businesses.

Workforce Training & EdTechHigher EducationGovernment Contractors

Last action: Jun 25, 2026

FederalIn Committee
Low Risk

HR 9334

Rep. Zoe Lofgren (D-CA) introduced this bill to expand the federal AI workforce by funding fellowships, scholarships, and training programs at agencies like NIST. It does not regulate private sector AI; instead, it builds the government's bench of AI experts to support trustworthy AI standards.

Higher EducationGovernment ContractingAI Research and Development

Last action: Jun 25, 2026

FederalIn Committee
Low Risk

HR 2385

The CREATE AI Act, introduced in the House of Representatives, would establish the National AI Research Resource (NAIRR) to give academic researchers and small businesses access to computing power and datasets for AI development. This federal program would level the playing field between Big Tech companies and smaller organizations by providing free access to expensive AI infrastructure that currently only major corporations can afford.

Cloud Computing ProvidersAI Software DevelopmentAcademic Research Institutions

Last action: Jun 25, 2026

FederalIn Committee
Low Risk

S 4916

Senator Mark Kelly (D-AZ) introduced this bill to create a federal task force studying how AI can help older Americans age safely at home and improve elder care. It's a research and recommendations effort, not a regulatory action, focused on things like AI-powered fall detection, medication management, and caregiver support tools.

Healthcare AIHome Health and Long-Term CareHealth Tech Startups

Last action: Jun 24, 2026

Bias Audit and Impact Assessment Obligations

Multiple proposed bills require employers to conduct bias audits of AI hiring tools. These audits evaluate whether AI systems produce disparate outcomes based on protected characteristics such as race, gender, age, and disability status.

Audit requirements vary by bill, but common elements include: annual third-party audits of automated employment decision tools, publication of audit results (in some proposals), and corrective action plans when disparate impact is identified. New York City's Local Law 144 serves as a model that several federal and state bills follow.

Indiana employers should ask their AI hiring tool vendors whether independent bias audits have been conducted, request copies of audit results, and include bias audit requirements in vendor contracts going forward.

Key Takeaway

Ask your AI hiring tool vendors whether independent bias audits have been conducted. Request copies of audit results. Include bias audit requirements in vendor contracts going forward.

Related Bills

FederalIn Committee
Medium Risk

S 5054

Senator Mark Warner (D-VA) introduced this bill to strip AI data centers of the bonus depreciation tax break (a major write-off that lets companies deduct big capital investments quickly) and force data center operators to report their electricity and water usage. It targets the massive resource consumption of AI infrastructure while making it more expensive to build.

Cloud InfrastructureAI Compute ProvidersData Center Real Estate

Last action: Jul 21, 2026

FederalIn Committee
Medium Risk

S 5057

Senator Mark Warner (D-VA) introduced this bill to ban certain AI models, likely those developed by foreign adversaries like China, from being used anywhere in the federal government. It would force federal agencies and their contractors to identify, remove, and avoid procuring these prohibited AI systems.

Federal ContractorsDefense & AerospaceCybersecurity

Last action: Jul 21, 2026

FederalIn Committee
Medium Risk

HR 9729

Rep. Don Beyer (D-VA) introduced this bill to require the Pentagon to keep humans in the loop when using autonomous weapons and AI-enabled military systems. It would amend Title 10 of the U.S. Code to mandate appropriate human command responsibility over lethal AI decisions made by the Armed Forces.

Defense ContractingAerospaceAutonomous Systems

Last action: Jul 16, 2026

FederalIn Committee
Low Risk

HR 9566

Rep. David Schweikert (R-AZ) introduced this bill to launch a pilot program at Arizona land border crossings where U.S. Customs and Border Protection would test an AI anomaly detection algorithm to spot unusual patterns in vehicles, cargo, or people entering the country. It's a government-focused pilot, not a private sector mandate.

Government ContractingDefense and Homeland Security TechComputer Vision and AI

Last action: Jul 7, 2026

IllinoisEnacted
Medium Risk

SB 315

Illinois just enacted SB 315, the Artificial Intelligence Safety Measures Act, sponsored by Senators Mary Edly-Allen and Sue Rezin. It requires the largest AI developers (companies with over $500M in revenue training massive 'frontier' models above 10^26 compute operations) to publish safety frameworks, report critical incidents within 72 hours, and undergo annual third-party audits. Penalties reach $1M per first violation and $3M for repeat violations, enforced solely by the Illinois Attorney General.

Foundation Model DevelopersCloud ComputingEnterprise AI Software

Last action: Jul 6, 2026

FederalIn Committee
Low Risk

HR 9501

Rep. Vern Buchanan (R-FL) introduced the AI Tax Integrity Act of 2026, which aims to ensure the IRS uses artificial intelligence responsibly when auditing taxpayers and processing returns. The bill would likely require oversight, transparency, or guardrails on IRS use of AI tools for tax enforcement. It's currently sitting in the House Ways and Means Committee.

Tax & Accounting ServicesFederal GovTechFinancial Services

Last action: Jul 1, 2026

Compliance Checklist for Indiana Employers Using AI in Hiring

Step 1: Inventory all AI tools used in your hiring process. Include resume screening software, chatbots, assessment platforms, video interview analysis, background check AI, and any other automated tools that influence hiring decisions.

Step 2: For each tool, document what data it collects, how it makes decisions, and what role its output plays in your hiring process. Determine whether the tool makes autonomous decisions or provides recommendations that humans review.

Step 3: Review vendor contracts for each AI hiring tool. Check for bias audit commitments, data usage rights, indemnification clauses, and compliance representations. Update contracts to include required protections.

Step 4: Assess your current candidate notification practices. Do you tell candidates when AI is used? Do you provide explanations for AI-driven rejections? Do you offer a human review option? Most proposed bills require all three.

Step 5: Request bias audit results from your vendors. If audits have not been conducted, determine whether your organization or your vendor will be responsible for conducting them under proposed legislation.

Step 6: Establish a monitoring process. Assign someone to track AI hiring legislation at both the federal and state level. Subscribe to our weekly newsletter for plain-English updates on bills that affect Indiana employers.

Keep reading

Related Guides

Common questions

Frequently Asked Questions

Is it legal to use AI for hiring in Indiana?

Yes, using AI in hiring is currently legal in Indiana. However, multiple federal and state bills are proposing new requirements for employers who use AI hiring tools. These proposed rules include mandatory disclosure to candidates, bias audits, and human review options. Even without specific AI hiring laws, existing anti-discrimination laws (Title VII, Indiana Civil Rights Law) already apply to AI-driven hiring decisions that produce discriminatory outcomes.

Do I need to tell candidates about AI screening in Indiana?

Indiana does not currently require AI hiring disclosure, but multiple proposed bills at both the federal and state level would make disclosure mandatory. Illinois already requires consent for AI video interview analysis under the AI Video Interview Act. As a best practice, Indiana employers should begin disclosing AI use in hiring now to build candidate trust and prepare for likely regulation.

What is a bias audit for AI hiring tools?

A bias audit is an independent evaluation of whether an AI hiring tool produces disparate outcomes based on protected characteristics like race, gender, age, or disability. Several proposed bills require annual third-party bias audits of automated employment decision tools, following the model established by New York City's Local Law 144. Audits typically analyze selection rates across demographic groups and identify statistically significant disparities.

Can I be sued for using AI in hiring in Indiana?

Under current law, you can be sued if your AI hiring tools produce discriminatory outcomes that violate Title VII or the Indiana Civil Rights Law, even if the discrimination was unintentional. Several proposed federal bills would create additional private rights of action specifically for AI-driven employment decisions, potentially increasing litigation risk for employers who use AI hiring tools without proper safeguards.

Need help preparing for AI compliance?

Our team helps Indiana organizations build AI governance frameworks tailored to their industry and risk profile.

Talk to Our Team

Get the Weekly AI Law Roundup

Plain-English summaries of the AI laws that matter for your business. Every Monday. Free.

No spam. Unsubscribe anytime.