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

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
High Risk

S 3952

Senator Peters introduced a bill that would create new compliance requirements for companies using AI in high-stakes decisions like hiring, lending, healthcare, and criminal justice. Companies would need to conduct annual bias audits, implement human oversight systems, and publicly disclose when AI makes decisions affecting people's lives.

HR TechFinancial ServicesHealthcare AI

Last action: Feb 26, 2026

FederalIn Committee
Medium Risk

HR 7576

Representatives Beyer and Obernolte introduced HR 7576 to create AI workforce training programs through tax credits. Companies that train workers in AI skills would get tax breaks, and the bill establishes government programs to help workers whose jobs are displaced by AI automation.

ManufacturingLogistics and TransportationCustomer Service Centers

Last action: Feb 13, 2026

IndianaIn Committee
High Risk

HB 1421

Indiana House Bill 1421 would completely ban employers from using automated decision systems (like AI hiring software, resume screening tools, or performance evaluation algorithms) to make employment decisions. The bill has just been introduced and sent to the Employment, Labor and Pensions Committee for review.

HR TechStaffing and RecruitingRetail

Last action: Jan 8, 2026

FederalIn Committee
High Risk

HR 6356

Rep. Yvette Clarke (D-NY) introduced legislation requiring companies to audit their AI systems for bias and discrimination before using them to make decisions about people. The bill would give individuals the right to know when AI makes decisions about them and to appeal those decisions to a human.

HR TechFinancial ServicesInsurance

Last action: Dec 2, 2025

FederalIn Committee
High Risk

S 3108

Senator Robert Casey Jr. introduced the AI-Related Job Impacts Clarity Act (S 3108), which would require companies to tell the government before using AI in ways that could affect jobs. Companies planning to deploy AI systems that might automate work or change employment would need to file advance notices with the Department of Labor, explaining how many workers could be affected and what support they'll provide.

ManufacturingRetailCustomer Service/Call Centers

Last action: Nov 5, 2025

FederalIn Committee
High Risk

S 2938

Senator Cantwell introduced the Artificial Intelligence Risk Evaluation Act, which would require companies developing AI systems to conduct safety evaluations before release and report critical failures to the government. The bill creates a new federal office to oversee AI safety and gives regulators power to investigate AI incidents, similar to how the NTSB investigates plane crashes.

HR TechFinancial ServicesHealthcare AI

Last action: Sep 29, 2025

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

S 4199

Senator Markey (D-MA) introduced a bill that would ban companies from using AI to collect or process personal data from anyone under 17 without explicit consent. The Youth AI Privacy Act specifically targets AI systems that analyze biometric data, predict behavior, or make automated decisions about minors, requiring companies to delete collected data and conduct regular impact assessments.

Social Media PlatformsEdTechGaming and Entertainment

Last action: Mar 25, 2026

FederalIntroduced
Low Risk

HRES 1007

House Resolution 1007 is a non-binding resolution that expresses Congress's opinion on how AI should be used in banking, lending, and housing. It doesn't create any new laws or requirements; it just states that Congress thinks financial companies should use AI responsibly, avoid discrimination, and be transparent about their AI systems.

Banking and Credit UnionsMortgage LendingFinancial Technology (Fintech)

Last action: Mar 19, 2026

FederalIn Committee
High Risk

S 3982

Senator Harris introduced S 3982 to make companies criminally liable when their AI systems are used to commit fraud, even if the company didn't intend the fraud. The bill closes a legal loophole where businesses could claim their AI acted independently, forcing companies to take responsibility for fraudulent outcomes from their automated systems.

Financial ServicesInsuranceHealthcare AI

Last action: Mar 4, 2026

FederalIn Committee
High Risk

S 3952

Senator Peters introduced a bill that would create new compliance requirements for companies using AI in high-stakes decisions like hiring, lending, healthcare, and criminal justice. Companies would need to conduct annual bias audits, implement human oversight systems, and publicly disclose when AI makes decisions affecting people's lives.

HR TechFinancial ServicesHealthcare AI

Last action: Feb 26, 2026

IndianaIn Committee
High Risk

HB 1421

Indiana House Bill 1421 would completely ban employers from using automated decision systems (like AI hiring software, resume screening tools, or performance evaluation algorithms) to make employment decisions. The bill has just been introduced and sent to the Employment, Labor and Pensions Committee for review.

HR TechStaffing and RecruitingRetail

Last action: Jan 8, 2026

FederalIn Committee
High Risk

S 3108

Senator Robert Casey Jr. introduced the AI-Related Job Impacts Clarity Act (S 3108), which would require companies to tell the government before using AI in ways that could affect jobs. Companies planning to deploy AI systems that might automate work or change employment would need to file advance notices with the Department of Labor, explaining how many workers could be affected and what support they'll provide.

ManufacturingRetailCustomer Service/Call Centers

Last action: Nov 5, 2025

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
High Risk

HR 8094

Rep. Don Beyer (D-VA) introduced legislation requiring companies that develop or deploy large AI models (like GPT-4 or Claude) to publicly disclose detailed information about their AI systems. Companies would need to report training data sources, model capabilities, safety testing results, and energy consumption to a new federal registry within 90 days of deployment.

Enterprise SoftwareHealthcare AIFinancial Services

Last action: Mar 26, 2026

FederalIn Committee
High Risk

S 4199

Senator Markey (D-MA) introduced a bill that would ban companies from using AI to collect or process personal data from anyone under 17 without explicit consent. The Youth AI Privacy Act specifically targets AI systems that analyze biometric data, predict behavior, or make automated decisions about minors, requiring companies to delete collected data and conduct regular impact assessments.

Social Media PlatformsEdTechGaming and Entertainment

Last action: Mar 25, 2026

FederalIn Committee
Low Risk

S 4179

Senator Murkowski (R-AK) introduced a bill requiring states to involve tribal representatives when investigating child abuse cases involving Native American children. The bill mandates that state child protective services notify and coordinate with tribes within 24 hours when AI-powered risk assessment tools flag potential abuse cases involving Native children.

Government TechnologyHealthcare AIChild Welfare Software

Last action: Mar 24, 2026

FederalIn Committee
Medium Risk

HR 8031

Representative Boebert introduced HR 8031 to repeal Biden's Executive Order on AI that established federal AI safety standards and oversight requirements. The bill would eliminate current federal AI governance frameworks, removing requirements for federal agencies to assess AI risks and for companies to report on their AI development activities.

Federal ContractorsHealthcare AIFinancial Services

Last action: Mar 20, 2026

FederalIn Committee
Medium Risk

HR 7997

Rep. Harriet Hageman (R-WY) introduced a bill requiring federal courts to study how AI is being used in the justice system. The bill would create a task force to examine AI use in everything from bail decisions to evidence analysis, then recommend guidelines for courts nationwide.

Legal TechnologyCourt Reporting ServicesCriminal Justice Software

Last action: Mar 19, 2026

FederalIntroduced
Low Risk

HRES 1007

House Resolution 1007 is a non-binding resolution that expresses Congress's opinion on how AI should be used in banking, lending, and housing. It doesn't create any new laws or requirements; it just states that Congress thinks financial companies should use AI responsibly, avoid discrimination, and be transparent about their AI systems.

Banking and Credit UnionsMortgage LendingFinancial Technology (Fintech)

Last action: Mar 19, 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

HR 7968

Rep. Suhas Subramanyam (D-VA) introduced this bill to help small businesses and startups access federal AI resources. It would create a new program at NIST (National Institute of Standards and Technology) that gives smaller companies access to government AI testing tools, datasets, and expertise that are currently only available to large corporations and research institutions.

AI StartupsHealthcare AIEdTech

Last action: Mar 17, 2026

FederalIn Committee
Medium Risk

S 4098

Senator Ted Budd (R-NC) introduced the Artificial Intelligence-Ready Data Act to create federal guidelines for how businesses prepare and manage data used in AI systems. The bill would establish new requirements for data quality, documentation, and transparency when companies use data to train or operate AI tools, affecting any business that develops or deploys AI systems.

Enterprise SoftwareHealthcare AIFinancial Services

Last action: Mar 16, 2026

FederalIn Committee
High Risk

HR 7786

Representative Yvette Clarke introduced HR 7786 to make companies liable when their AI tools are used for fraud. If someone uses AI to create deepfakes, forge documents, or run scams, both the fraudster AND the AI company could face penalties unless the company took reasonable steps to prevent misuse.

AI Software DevelopmentDigital Identity VerificationFinancial Services

Last action: Mar 4, 2026

FederalIn Committee
Medium Risk

HR 7576

Representatives Beyer and Obernolte introduced HR 7576 to create AI workforce training programs through tax credits. Companies that train workers in AI skills would get tax breaks, and the bill establishes government programs to help workers whose jobs are displaced by AI automation.

ManufacturingLogistics and TransportationCustomer Service Centers

Last action: Feb 13, 2026

FederalIn Committee
Low Risk

S 3586

Senator Todd Young (R-IN) introduced a bill to create a voluntary AI certification program specifically for small businesses. The bill would establish an 'AI Center of Excellence' at the Small Business Administration that helps small companies adopt AI responsibly through training, resources, and a certification process that could give them advantages in federal contracting.

Small Business ServicesFederal ContractorsProfessional Services

Last action: Jan 7, 2026

FederalIn Committee
High Risk

HR 6356

Rep. Yvette Clarke (D-NY) introduced legislation requiring companies to audit their AI systems for bias and discrimination before using them to make decisions about people. The bill would give individuals the right to know when AI makes decisions about them and to appeal those decisions to a human.

HR TechFinancial ServicesInsurance

Last action: Dec 2, 2025

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
Low Risk

S 4216

Senator Brian Schatz (D-HI) introduced a bill to repeal President Biden's Executive Order on AI, which currently requires federal agencies to develop AI safety standards and companies to share AI safety test results with the government. This would eliminate federal AI oversight requirements that the Executive Order put in place.

Federal ContractorsHealthcare AIFinancial Services

Last action: Mar 26, 2026

FederalIn Committee
High Risk

S 4199

Senator Markey (D-MA) introduced a bill that would ban companies from using AI to collect or process personal data from anyone under 17 without explicit consent. The Youth AI Privacy Act specifically targets AI systems that analyze biometric data, predict behavior, or make automated decisions about minors, requiring companies to delete collected data and conduct regular impact assessments.

Social Media PlatformsEdTechGaming and Entertainment

Last action: Mar 25, 2026

FederalIn Committee
High Risk

S 4214

Senator Bernie Sanders wants to block all new data center construction in the US until Congress passes laws regulating AI safety. The bill would immediately halt permits and approvals for data centers (the facilities that power cloud computing and AI services) and create a presidential commission to study AI risks.

Cloud Computing ProvidersAI/ML Platform CompaniesData Center Construction

Last action: Mar 25, 2026

FederalIn Committee
High Risk

HR 8037

Rep. Baumgartner (R-WA) introduced a bill requiring companies to disclose when they use AI systems trained on data from China, Russia, Iran, or North Korea. Companies would face fines up to $5 million for failing to tell customers about these foreign data sources in their AI products.

Enterprise SoftwareCloud Computing ServicesHealthcare AI

Last action: Mar 24, 2026

FederalIn Committee
Medium Risk

HR 7997

Rep. Harriet Hageman (R-WY) introduced a bill requiring federal courts to study how AI is being used in the justice system. The bill would create a task force to examine AI use in everything from bail decisions to evidence analysis, then recommend guidelines for courts nationwide.

Legal TechnologyCourt Reporting ServicesCriminal Justice Software

Last action: Mar 19, 2026

FederalIn Committee
Medium Risk

S 4154

Senator Roger Wicker (R-MS) introduced a bill requiring federal courts to create policies for how judges and court staff use AI tools. The Research and Oversight of AI in Courts Act would mandate each federal court to develop guidelines on AI use, track which AI systems they're using, and report annually on their AI practices to Congress.

Legal TechEnterprise SoftwareDocument Management Systems

Last action: Mar 19, 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.

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.

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