What Chicago employers need to know about AI recruiting tools and compliance

By Kelly Pallanti, VP, Client Services at NorthstarPMO

A few months ago, I opened an applicant tracking system I manage for a client and noticed something I hadn’t seen before. Candidates were being ranked. Scores had appeared next to every name. At some point, the system had quietly started using AI to evaluate applicants, with no notification and no explanation of how it was making those distinctions.

I’ve been in HR long enough to know what questions to ask. But I was concerned about the managers at that company with access to the system. They were likely clicking on the highest-ranked candidates to schedule interviews and moving on.

This is how AI enters most hiring processes—not through a boardroom decision, but through a software update nobody flagged. A Harvard Business Review analysis found that roughly 90 percent of employers already use some form of automated system to rank or filter candidates. Chances are, it’s already part of your process. The question is whether anyone in your organization knows what it’s doing.

Illinois Was One of the First States to Regulate AI in Hiring

Here’s what makes this particularly relevant for Chicago businesses: Illinois moved on this early, and the rules are already in force.

The Illinois Artificial Intelligence Video Interview Act requires employers to tell candidates when AI is evaluating their video interviews, explain how it works, and get consent first. And it doesn’t carve out exceptions for software. If your hiring tool is filtering out candidates in a way that produces a discriminatory pattern, your company owns that outcome, whether a human made the call or an algorithm did.

Chicago-area employers are used to navigating a demanding regulatory environment. This is the next frontier of it. The organizations figuring this out now will have a significant advantage over those who wait for a complaint to force the issue.

The Real Risk of AI Hiring Tools Isn’t the Technology

I’m not arguing against AI in hiring. When it’s implemented thoughtfully, it can genuinely help, especially for companies managing high application volume without a large HR team. I’ve seen it work.

I’ve also seen what happens when nobody can explain how a tool makes its decisions. That’s when things get complicated. Regulators aren’t interested in whether you used sophisticated technology. They want to know whether your process was fair and whether you can demonstrate it. That requires understanding what your system is doing, not just trusting that it’s “smart.”

At many growing companies, that understanding simply doesn’t exist. Someone approved the software. Someone else uses it daily. And nobody has ever sat down to ask what it’s optimizing for.

Three Ways to Manage Your AI Hiring Compliance Right Now

This doesn’t have to be a major initiative. A few concrete steps can make a meaningful difference:

1) Map where AI touches your hiring process. Check your current tools, focusing on any that have been updated recently. Features often get added quietly. Find out what’s running before you assume you know.

2) Make human review non-negotiable. AI scores can help your team prioritize, but they shouldn’t be the reason a candidate never gets a second look. The people doing that review also need real authority to push back on a ranking.

3) Put your vendor on record. Ask in writing how their model works, what data it uses, and how they’ll communicate future changes. A vendor who can’t answer those questions clearly is worth reconsidering.

If you use AI-assisted video interviewing and haven’t reviewed your Illinois disclosure obligations yet, that’s the most time-sensitive item on this list.

What Responsible AI Hiring Comes Down To

There’s a version of this conversation that feels overwhelming—new laws, evolving technology, liability exposure. I understand why some leaders would rather not look too closely.

But the goal isn’t perfection; it’s intentionality: knowing what your tools do, keeping humans in the loop, and staying current on state requirements. That’s always been the standard for good hiring practice. AI just makes it more important to pay attention to how those decisions actually get made, not just assume they’re getting made well.

NorthstarPMO helps Chicago businesses navigate AI compliance, hiring practices, and people operations. Visit northstarpmo.com to learn more.