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
Low Risk

HR 9285

Rep. Michael Lawler (R-NY) wants HHS to launch an AI-powered surveillance program that tracks heat-related illnesses across the country and predicts outbreaks before they happen. The bill creates a federal monitoring system, not new rules for private businesses, so it's primarily a government technology initiative rather than a regulatory burden.

Healthcare AIHospital SystemsConstruction

Last action: Jun 11, 2026

FederalIn Committee
Medium Risk

S 4774

Senator Jeff Merkley (D-OR) introduced this bill to ban distribution of materially deceptive AI-generated audio, video, or images of federal candidates within 60 days of an election. It also blocks states from purging voters based on unverified third-party challenge databases (like those used by some activist groups). Violators could face civil penalties and lawsuits from candidates targeted by deepfakes.

Generative AISocial Media PlatformsPolitical Advertising

Last action: Jun 11, 2026

FederalIn Committee
Low Risk

S 4742

Senator Mark Kelly (D-AZ) introduced this bill to authorize federal labor market data collection focused on how AI is reshaping the American workforce. It directs federal agencies to measure AI's impact on jobs, wages, and worker displacement, but does not impose any compliance requirements on private businesses.

HR TechStaffing and Workforce ServicesManufacturing

Last action: Jun 10, 2026

FederalIn Committee
Medium Risk

HR 9125

Rep. Sara Jacobs (D-CA) introduced the Sectoral AI Governance Act of 2026, which would assign AI oversight to existing federal agencies based on the sector where AI is used (think FDA for medical AI, EEOC for hiring AI) rather than creating one new mega-regulator. The bill is sitting in the House Judiciary and Oversight Committees, so nothing is law yet, but it signals where federal AI rules are heading.

Healthcare AIHR TechFinancial Services

Last action: Jun 3, 2026

FederalIn Committee
Low Risk

S 4476

Senator Mark Warner's bill creates a voluntary framework for AI developers and companies using AI to share data about how AI is affecting their workforce (think hiring, firing, task automation, and skill shifts). The Secretary of Labor would then compile and report this data to Congress and the public. Nothing here is mandatory, it's an opt-in disclosure program.

Enterprise AI / AI DevelopersHR TechStaffing and Recruiting

Last action: Apr 30, 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

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
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: May 19, 2026

FederalIn Committee
Low Risk

HR 8664

Rep. Hillary Scholten (D-MI) introduced this bill to require the Small Business Administration to study and report to Congress on how small businesses are adopting AI tools. It creates a reporting obligation for the SBA itself, not for private companies, and would track adoption rates, barriers, and resource needs.

Small Business ServicesAI Software VendorsBusiness Software (CRM, Accounting)

Last action: May 4, 2026

FederalIn Committee
Low Risk

S 4476

Senator Mark Warner's bill creates a voluntary framework for AI developers and companies using AI to share data about how AI is affecting their workforce (think hiring, firing, task automation, and skill shifts). The Secretary of Labor would then compile and report this data to Congress and the public. Nothing here is mandatory, it's an opt-in disclosure program.

Enterprise AI / AI DevelopersHR TechStaffing and Recruiting

Last action: Apr 30, 2026

FederalIn Committee
High Risk

HR 8526

Rep. David Schweikert (R-AZ) introduced a bill requiring mammography facilities that use AI systems to meet new FDA quality standards and undergo additional inspections. The bill would mandate that facilities using AI for breast cancer screening disclose this to patients and maintain specific documentation about their AI tools.

Healthcare AIMedical ImagingHospital Systems

Last action: Apr 27, 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

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

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
Low Risk

S 4762

Senator Rick Scott (R-FL) wants the Department of Homeland Security to produce an annual report assessing how terrorists could use generative AI tools like ChatGPT, image generators, and deepfake technology to attack the United States. The bill creates a recurring threat assessment but does not regulate companies that build or deploy generative AI.

Generative AI DevelopersCloud ComputingCybersecurity

Last action: Jun 11, 2026

FederalIn Committee
Medium Risk

S 4774

Senator Jeff Merkley (D-OR) introduced this bill to ban distribution of materially deceptive AI-generated audio, video, or images of federal candidates within 60 days of an election. It also blocks states from purging voters based on unverified third-party challenge databases (like those used by some activist groups). Violators could face civil penalties and lawsuits from candidates targeted by deepfakes.

Generative AISocial Media PlatformsPolitical Advertising

Last action: Jun 11, 2026

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: May 19, 2026

FederalIn Committee
Low Risk

HR 8819

Rep. Ted Lieu's bill would force every federal agency to adopt NIST's AI Risk Management Framework when they build, buy, or use AI systems. It's an internal government mandate, not a rule for private companies, but it would push the NIST framework toward becoming the de facto national standard for AI risk management.

Federal ContractorsEnterprise AI SoftwareCloud Services

Last action: May 14, 2026

FederalIn Committee
Low Risk

S 4456

Senator Jim Banks (R-IN) introduced the AI OVERWATCH Act to monitor how foreign adversaries (think China, Russia, Iran, North Korea) use artificial intelligence in ways that could threaten U.S. national security and economic interests. The bill likely directs federal agencies, possibly Treasury and intelligence community, to track and report on adversarial AI development, with implications for export controls and foreign investment review.

SemiconductorsCloud InfrastructureFrontier AI Development

Last action: Apr 30, 2026

FederalIn Committee
High Risk

HR 8526

Rep. David Schweikert (R-AZ) introduced a bill requiring mammography facilities that use AI systems to meet new FDA quality standards and undergo additional inspections. The bill would mandate that facilities using AI for breast cancer screening disclose this to patients and maintain specific documentation about their AI tools.

Healthcare AIMedical ImagingHospital Systems

Last action: Apr 27, 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 9285

Rep. Michael Lawler (R-NY) wants HHS to launch an AI-powered surveillance program that tracks heat-related illnesses across the country and predicts outbreaks before they happen. The bill creates a federal monitoring system, not new rules for private businesses, so it's primarily a government technology initiative rather than a regulatory burden.

Healthcare AIHospital SystemsConstruction

Last action: Jun 11, 2026

FederalIn Committee
Low Risk

HR 9279

Rep. Harriet Hageman's bill would let private citizens and businesses sue federal employees personally when those employees use or develop AI in ways that violate First Amendment rights, think government AI systems flagging, suppressing, or censoring speech online. It targets situations like federal agencies pressuring platforms to remove content or building AI tools that chill protected speech.

Social Media PlatformsContent Moderation TechGovernment AI Contractors

Last action: Jun 11, 2026

FederalIn Committee
Low Risk

S 4742

Senator Mark Kelly (D-AZ) introduced this bill to authorize federal labor market data collection focused on how AI is reshaping the American workforce. It directs federal agencies to measure AI's impact on jobs, wages, and worker displacement, but does not impose any compliance requirements on private businesses.

HR TechStaffing and Workforce ServicesManufacturing

Last action: Jun 10, 2026

FederalIn Committee
Medium Risk

S 4656

Senator Gillibrand's bill would set new rules for how the Department of Defense buys, builds, and uses AI, including generative AI tools. It focuses on security testing, vendor accountability, and tracking AI risks across military operations, with implications for any contractor selling AI to DoD.

Defense ContractingGenerative AICloud Infrastructure

Last action: Jun 2, 2026

FederalIn Committee
Low Risk

S 4627

Senator Ted Budd's FARM AI Act of 2026 directs the USDA to study and support artificial intelligence adoption in American agriculture, covering uses like precision farming, crop monitoring, livestock management, and supply chain optimization. The bill is currently sitting in the Senate Agriculture Committee and focuses on research, coordination, and farmer access to AI tools rather than imposing new restrictions.

AgTechAgriculture and FarmingFood Processing and Supply Chain

Last action: May 21, 2026

FederalIn Committee
Low Risk

S 4456

Senator Jim Banks (R-IN) introduced the AI OVERWATCH Act to monitor how foreign adversaries (think China, Russia, Iran, North Korea) use artificial intelligence in ways that could threaten U.S. national security and economic interests. The bill likely directs federal agencies, possibly Treasury and intelligence community, to track and report on adversarial AI development, with implications for export controls and foreign investment review.

SemiconductorsCloud InfrastructureFrontier AI Development

Last action: Apr 30, 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
Low Risk

S 4742

Senator Mark Kelly (D-AZ) introduced this bill to authorize federal labor market data collection focused on how AI is reshaping the American workforce. It directs federal agencies to measure AI's impact on jobs, wages, and worker displacement, but does not impose any compliance requirements on private businesses.

HR TechStaffing and Workforce ServicesManufacturing

Last action: Jun 10, 2026

FederalIn Committee
Low Risk

S 4727

Senator Markey's bill orders the EPA to study the environmental footprint of AI data centers (water use, energy consumption, emissions) and directs NIST to form a consortium to develop standardized measurement methods. It would also create a voluntary reporting system for AI developers and operators to disclose environmental impacts.

Cloud Computing and Data CentersAI Model DevelopmentElectric Utilities

Last action: Jun 9, 2026

FederalIn Committee
Low Risk

HR 9183

Rep. Don Beyer's bill directs the EPA to study the environmental footprint of AI data centers (energy, water, emissions) and tasks NIST with convening industry experts to develop voluntary measurement standards. It would also create a federal reporting system for companies to disclose AI environmental impacts, though the bill itself focuses on study and standard-setting rather than immediate mandates.

Cloud ComputingData CentersAI Model Development

Last action: Jun 8, 2026

FederalIn Committee
Medium Risk

HR 9125

Rep. Sara Jacobs (D-CA) introduced the Sectoral AI Governance Act of 2026, which would assign AI oversight to existing federal agencies based on the sector where AI is used (think FDA for medical AI, EEOC for hiring AI) rather than creating one new mega-regulator. The bill is sitting in the House Judiciary and Oversight Committees, so nothing is law yet, but it signals where federal AI rules are heading.

Healthcare AIHR TechFinancial Services

Last action: Jun 3, 2026

FederalIn Committee
Medium Risk

S 4656

Senator Gillibrand's bill would set new rules for how the Department of Defense buys, builds, and uses AI, including generative AI tools. It focuses on security testing, vendor accountability, and tracking AI risks across military operations, with implications for any contractor selling AI to DoD.

Defense ContractingGenerative AICloud Infrastructure

Last action: Jun 2, 2026

FederalIn Committee
Low Risk

HR 8819

Rep. Ted Lieu's bill would force every federal agency to adopt NIST's AI Risk Management Framework when they build, buy, or use AI systems. It's an internal government mandate, not a rule for private companies, but it would push the NIST framework toward becoming the de facto national standard for AI risk management.

Federal ContractorsEnterprise AI SoftwareCloud Services

Last action: May 14, 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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