Artificial intelligence (AI) is now part of everyday HR – from recruitment and performance reviews to scheduling, analytics, and workforce planning. As AI adoption accelerates, so does regulatory scrutiny.
In 2026, governments and regulators around the world are increasingly focused on how AI is used in employment decisions, particularly where it affects hiring, promotion, performance management, termination, employee data, fairness, and transparency.
This guide explains how AI is regulated through employment law in 2026, what employers need to understand across key countries and regions, and how to use AI in HR responsibly without creating compliance or legal risk.
This article is written for employers, HR leaders, people managers, and business owners – particularly those managing remote, distributed, or multi-country teams – who want clarity on AI in hiring and HR, without legal jargon.
For a broader overview of workplace changes in 2026 – including minimum wage updates, paid leave reforms, pay transparency rules, and global employment law trends – see our full guide to Employment Law Changes in 2026.
This article provides general information only and should not be taken as legal advice. AI and employment law requirements vary by country, state, and region.
TL;DR:
In 2026, AI used in hiring, performance, promotion, or termination is treated as part of the employment decision.
Even without AI-specific laws, employers remain responsible for fairness, transparency, and outcomes.
The global shift is clear: AI must support human judgement, not replace it.
At a Glance: AI and Employment Law in 2026 (Global Summary)
If you only read one section, start here.
While approaches differ by country, the direction is consistent: AI used in HR is being treated as part of employment decision-making, not standalone technology.
| Country / Region | Regulatory approach | Employment AI focus | What employers need to know in 2026 |
| United States (Federal) | Enforcement-led | Anti-discrimination, fair hiring | AI-assisted decisions are treated as employment decisions. Employers remain accountable for outcomes. |
| New York City (US) | City-level AI hiring law | Automated hiring and promotion tools | Bias audits, public audit summaries, and advance notice required for AEDTs. |
| Illinois (US) | State employment law amendment | AI-related discrimination in hiring | Applicants must be notified when AI is used; AI must not discriminate. |
| California (US) | Employment law + automated decision frameworks | Hiring, promotion, performance, termination | Employers must prevent discriminatory outcomes, retain records, and explain AI-influenced decisions. |
| Colorado (US) | AI-specific legislation | High-risk AI systems | Risk management, bias mitigation, and human oversight required from 2026. |
| Maryland (US) | Targeted hiring restriction | Facial recognition in interviews | Explicit applicant consent required before use. |
| Other US states | Proposed laws / enforcement | Algorithmic discrimination | No uniform rules yet, but AI-assisted employment decisions fall within employment law. |
| United Kingdom | Principles-based | Equality, fairness, automated decisions | Human oversight required; discriminatory or opaque AI use is unlawful. |
| Australia | Existing employment + privacy law | Fair Work, procedural fairness | AI should support decisions, not replace human judgement. |
| European Union | EU AI Act | High-risk AI in employment | Recruitment and workforce AI classed as high-risk; strong governance required. |
| Canada (Ontario) | Provincial employment reform | AI disclosure in hiring | Job ads must disclose AI use from Jan 1, 2026. |
| Singapore | Guidance-led | Responsible AI use | Ethical AI, transparency, and governance encouraged. |
| Japan | AI governance principles | Human oversight | AI should not replace human judgement in employment decisions. |
| South Korea | AI ethics frameworks | Fairness and transparency | Focus on preventing discriminatory or opaque AI outcomes. |
| Brazil | Emerging AI governance | Worker rights and transparency | Growing scrutiny of AI’s impact on labor rights. |
Is AI Regulated in Employment Law in 2026?
Yes. In 2026, AI used in hiring, performance management, promotion, termination, or workforce management is regulated through employment law, anti-discrimination law, and data protection frameworks in most jurisdictions.
Even where there is no single “AI employment law,” regulators increasingly treat AI-assisted decisions as employment decisions. That means employers remain responsible for outcomes, including those influenced by third-party AI tools.
The key global shift is not whether AI is allowed in HR, it is how it is governed, explained, and overseen by humans.
Key takeaways for employers
- AI-assisted HR decisions are treated as employment decisions, not technical processes
- Employers remain accountable, even when using third-party AI tools
- Transparency, fairness, and human oversight are increasingly expected globally
- Governance is becoming a standard HR compliance requirement, not an optional extra
Why AI in the Workplace Matters More in 2026
For several years, AI adoption in HR moved faster than regulation. That gap is now closing.
Across jurisdictions, regulators are increasingly aligned around a set of employment-specific expectations:
- Transparency: People should know when AI is used in employment decisions
- Fairness: AI must not result in unlawful discrimination
- Human accountability: Employers remain responsible for AI-assisted decisions
- Data protection: Employee and candidate data must be handled lawfully and securely
- Human oversight: AI should support, not replace, human judgement
The message for employers is clear: Using AI does not reduce responsibility. It increases it.
United States: AI Regulation Is Taking Shape Through Employment Law, States, and Cities
In the United States, there is no single federal “AI employment law.” Instead, AI regulation in the workplace is emerging through a combination of:
- Existing anti-discrimination and employment laws
- State-level AI and employment legislation
- City-level hiring rules
- Active federal enforcement that treats AI as part of the employment decision-making process
For employers, the practical outcome is consistent: If AI influences an employment decision, it is regulated as an employment practice.
Federal enforcement: AI is already covered by employment law
Even without a dedicated federal AI statute, US regulators have been explicit that AI does not sit outside employment law.
Federal agencies, including the Equal Employment Opportunity Commission (EEOC), have made it clear that:
- AI used in hiring, promotion, performance management, or termination is treated as a selection procedure
- Employers remain liable if AI-assisted decisions result in unlawful discrimination
- The use of AI increases the need for oversight rather than reducing employer responsibility
What this means:
If AI contributes to an employment outcome, the employer remains accountable – regardless of whether the tool is built internally or supplied by a third-party vendor.
New York City: Automated Employment Decision Tools (AEDTs)
New York City has one of the most specific and enforceable AI employment rules in the US.
Under NYC Local Law 144, employers and employment agencies using Automated Employment Decision Tools (AEDTs) in hiring or promotion decisions must meet strict requirements.
Key requirements
- Independent bias audits of AEDTs must be completed annually
- Public summaries of the most recent bias audit results must be available
- Advance notice must be provided to candidates or employees when AEDTs are used
- The law applies to roles located in New York City and many remote roles linked to NYC operations
What this means
If you use AI to screen, rank, or assess candidates – or to support promotion decisions – you need documented bias testing, transparency, and notice. These tools are regulated as part of the hiring and promotion process, not as background technology.
Illinois: AI and Employment Discrimination (Effective January 1, 2026)
Illinois has amended the Illinois Human Rights Act to directly address the use of AI in employment decisions.
Key requirements
- Employers must notify applicants when AI is used in employment decisions
- AI tools must not result in discriminatory outcomes, even unintentionally
- Employers remain legally responsible for decisions made with AI support
What this means
If you use AI for résumé screening, candidate ranking, or automated assessments, those tools are assessed through the same discrimination standards as human decision-making.
California: AI and Employment Decision-Making
California has some of the most developed employment-focused rules affecting AI use in the workplace. Regulation comes through anti-discrimination law and automated decision-making frameworks, rather than a single AI statute.
Key requirements
- AI and automated decision systems must not result in discriminatory outcomes in hiring, promotion, pay, performance management, or termination
- Employers remain fully responsible for decisions made using AI-supported tools, including third-party systems
- Employment records connected to automated decision-making must be retained
- Automated tools that significantly influence employment outcomes are subject to scrutiny and challenge
- Transparency expectations apply, meaning employers may need to explain when and how AI influences employment decisions
What this means
AI is treated as an extension of the employer’s decision-making process. Employers should be prepared to demonstrate human oversight, explain decision logic, and show steps taken to reduce bias or unfair outcomes.
Colorado: AI-Specific Obligations for High-Risk Systems (Effective 2026)
Colorado is one of the first US states to pass AI-specific legislation that can apply to employment use cases.
The law introduces obligations for organizations that develop or deploy high-risk AI systems, which may include AI used in hiring, promotion, termination, or monitoring.
What this means
Employers using AI in high-impact HR decisions may need to assess risks, monitor for bias, and maintain clear human oversight – signaling a shift toward direct AI regulation in employment contexts.
Maryland: Facial Recognition in Hiring
Maryland has taken a targeted approach to regulating AI in recruitment.
Employers must obtain explicit applicant consent before using facial recognition technology in job interviews.
What this means
Certain AI technologies, particularly biometric and surveillance-style tools, face stricter controls in hiring contexts.
Other US States to Watch
While New York, Illinois, California, and Colorado currently lead, other states are actively exploring or enforcing AI-related employment risks.
- New Jersey has proposed and debated legislation addressing algorithmic discrimination and automated decision systems, signaling likely future regulation in employment contexts
- Massachusetts relies on strong enforcement of existing anti-discrimination law, with regulators clearly indicating that AI-assisted employment decisions fall squarely within scope
Together, these developments point to a clear national trend: AI in HR is being regulated as employment decision-making, not experimental technology.
What This Means for US Employers in 2026
Across federal enforcement, state laws, and city-level rules, the direction is consistent:
- AI-assisted decisions are treated as employment decisions
- Employers remain accountable for outcomes, even when using third-party tools
- Transparency, fairness, and human oversight are increasingly expected
- AI governance is becoming part of standard HR compliance
For employers operating across multiple US states, the safest approach is to assume that AI used in HR will be scrutinized through an employment law lens, even where no AI-specific statute exists.
United Kingdom: AI Under Existing Employment and Data Laws
The UK has taken a principles-based approach to AI regulation rather than introducing AI-specific employment legislation. That does not mean AI use in HR is unregulated.
Instead, AI in the workplace is governed through a combination of:
- Equality and anti-discrimination law
- Data protection rules, particularly around automated decision-making and profiling
- Employment law principles relating to fairness, transparency, and due process
How this affects AI use in employment
UK employers must ensure that decisions relating to recruitment, performance, promotion, discipline, and dismissal are fair, reasonable, and non-discriminatory. These obligations apply regardless of whether a decision is made by a person, supported by AI, or informed by automated analysis.
In practice:
- AI tools used in hiring or promotion must not result in indirect discrimination
- Employers remain responsible for outcomes, even when AI systems are supplied by third-party vendors
- Automated or AI-supported decisions that significantly affect employees may attract additional scrutiny if individuals cannot understand or challenge the outcome
UK data protection law also places limits on solely automated decisions that have legal or similarly significant effects, reinforcing the need for meaningful human involvement in key employment decisions.
What this means
If AI is used to:
- Screen or rank candidates
- Analyze performance or productivity
- Flag disciplinary or termination risks
- Support promotion or pay decisions
Employers should ensure:
- A human decision-maker remains involved
- Decisions can be explained and justified
- Individuals have a genuine opportunity to question or challenge outcomes
In short, AI should function as decision support, not decision replacement.
Australia: AI Through Employment, Fair Work, and Privacy Obligations
Australia does not yet have AI-specific employment legislation. However, AI use in HR is increasingly assessed through existing workplace and regulatory frameworks, and scrutiny is growing.
AI in employment intersects with:
- Fair Work obligations, including procedural fairness and lawful termination
- Anti-discrimination law at federal and state levels
- Privacy and data protection requirements, particularly where employee or candidate data is processed by AI systems
How this affects AI use in employment
Australian employment law places strong emphasis on fair process, especially in termination, performance management, and disciplinary decisions. If AI tools influence these decisions, employers must still demonstrate that outcomes were reasonable, proportionate, and evidence-based.
Key considerations include:
- AI tools must not produce discriminatory outcomes, even unintentionally
- Employers remain accountable for AI-informed decisions, including those based on vendor tools
- High-impact decisions should not be fully automated or opaque
Privacy regulators have also made it clear that organizations remain responsible for how AI systems handle personal information, including training data, monitoring tools, and predictive analytics.
What this means
If AI is used to:
- Screen applicants or rank candidates
- Monitor performance or attendance
- Support disciplinary or termination decisions
- Generate predictive insights about employees
Employers should:
- Keep humans clearly involved in decisions
- Use AI outputs as one input, not the sole basis
- Be able to explain how AI is used and how outcomes are reached
The overall direction in Australia is toward greater scrutiny of automated decision-making in employment.
European Union: High-Risk AI in Employment and Workers’ Management
The European Union has taken the most explicit and comprehensive approach globally to regulating AI in the workplace.
Under the EU Artificial Intelligence Act (AI Act), many AI systems used in employment and workers’ management are classified as high-risk, including tools used for:
- Recruitment and candidate screening
- Performance evaluation and monitoring
- Promotion, contract renewal, and termination decisions
- Workforce management and task allocation
How this affects AI use in employment
Employers deploying high-risk AI systems in the EU may be required to:
- Conduct risk assessments before use
- Ensure human oversight of AI-supported decisions
- Maintain technical documentation and records
- Monitor systems for bias, errors, and discriminatory outcomes
- Provide clear information to workers and candidates about AI use
Importantly, responsibility does not sit solely with AI vendors. Employers using AI systems have direct compliance obligations, even when tools are purchased from third parties.
The AI Act is scheduled to be fully applicable in 2026, with staggered obligations.
What this means
For employers operating in or hiring from the EU:
- AI tools used in HR are treated as regulated workplace systems
- Governance, documentation, and oversight are mandatory
- AI must support lawful and fair employment decisions
The EU framework is already influencing regulatory thinking globally.
Canada: Growing Focus on Transparency and Fairness in AI-Supported Hiring
Canada does not yet have a single national AI employment law in force. However, AI use in employment is increasingly shaped through provincial reforms, human rights law, and emerging AI governance frameworks.
Ontario: AI disclosure in recruitment (Effective January 1, 2026)
Ontario has taken a clear, employment-specific step.
From January 1, 2026, employers must disclose in publicly advertised job postings when AI is used to:
- Screen applications
- Assess candidates
- Support selection decisions
This applies regardless of whether the AI system is developed internally or supplied by a third-party vendor.
Broader employment implications across Canada
Across provinces:
- Employers remain responsible for preventing discrimination in AI-assisted hiring
- Transparency and explain ability are increasingly expected
- Automated decision-making in employment is likely to be scrutinized through existing human rights and employment law frameworks
What this means
If AI influences hiring or employment decisions in Canada:
- Employers should be able to explain how AI is used
- Decisions should not rely solely on automated outputs
- AI governance is becoming part of standard recruitment compliance
Other Countries to Watch: Global AI and Employment Developments
Beyond the US, UK, EU, Australia, and Canada, several other countries are shaping expectations around AI use in employment.
Singapore
Singapore promotes responsible AI use through guidance rather than strict mandates, encouraging:
- Ethical AI principles
- Transparency with employees
- Strong governance practices
This guidance is increasingly applied in HR and workforce management contexts.
Japan
Japan emphasizes:
- Human control over AI systems
- Accountability for AI-driven outcomes
- Avoiding over-reliance on automation
These principles influence expectations for AI use in employment decisions.
South Korea
South Korea has introduced AI ethics frameworks focused on:
- Fairness and non-discrimination
- Transparency in algorithmic decision-making
- Protection against unjustified automated outcomes
Brazil
Brazil is developing AI governance frameworks that emphasize:
- Protection of workers’ rights
- Transparency around automated decision-making
- Accountability for AI-driven outcomes
What Counts as Automated Decision-Making in HR?
Regulators focus most closely on AI used for:
- Résumé screening and candidate shortlisting
- Automated interview scoring or ranking
- Performance monitoring or productivity scoring
- Predictive analytics (eg attrition or “flight risk” models)
- Workforce scheduling and optimization
If AI influences decisions affecting pay, promotion, termination, or access to work, it is increasingly treated as an employment decision, not a technical process.
What This Means for Employers Using AI in 2026
Even where there is no dedicated “AI employment law”:
- Employment and anti-discrimination laws still apply
- Employers remain responsible for AI-assisted decisions
- Transparency and human oversight are increasingly expected
- AI governance is becoming part of everyday HR compliance
Key takeaway:
AI-driven decisions are now firmly treated as employment decisions.
How HR Partner Supports Responsible AI Use
AI should make HR simpler, not riskier.
With HR Partner, you can:
- Keep clear records of recruitment and employment decisions
- Store policies explaining how AI is used in HR
- Maintain audit-ready documentation
- Use AI features designed to support, not replace, human decision-making
Built for businesses with 20-500 employees, HR Partner helps teams use technology responsibly while staying compliant and people-first.
Book a demo to see how HR Partner can support your business in 2026.
FAQs: AI and Employment Law in 2026
Is AI regulated in employment law in 2026?
Yes. In 2026, AI used in hiring, performance management, promotion, or termination is regulated through employment, anti-discrimination, and data protection laws in many jurisdictions. Even where no AI-specific law exists, employers remain accountable for outcomes.
Can employers use AI for hiring decisions?
Yes, but employers remain responsible for the results. AI can support recruitment decisions, but it must not discriminate, operate unfairly, or replace meaningful human judgement.
Do employers need to tell candidates or employees when AI is used?
In some jurisdictions, disclosure is legally required. In others, transparency is not always mandatory but is increasingly expected and considered best practice.
What counts as automated decision-making in HR?
Automated decision-making includes AI tools that influence hiring, promotion, performance ratings, pay, termination, or access to work – such as screening, scoring, ranking, or predictive analytics.
Does using AI reduce employer liability?
No. Employers remain legally responsible for employment decisions, even when those decisions are supported by AI or made using third-party tools.
How should employers prepare for AI compliance in 2026?
Employers should understand where AI is used, keep humans involved in decisions, update privacy notices, document AI governance, and ensure AI supports – not replaces – fair employment processes.