Regulon — IN-HB-1421 · IN HB 1421 (Employer Automated Decision Systems)

WHAT THIS BILL REGULATES · 6 REQUIREMENT TYPES

How Is This Bill Enforced

Enforcement Authority

Dual enforcement: the Indiana Department of Labor may receive complaints, investigate violations, and require employers to file reports. A covered individual or labor organization adversely affected by a violation may bring a private civil action regardless of whether the department has acted. Before filing suit, the plaintiff must notify the department in writing; the department then has 60 days to decide whether to intervene.

Private Right of Action

may bring a private civil action regardless of whether the department has acted.

Penalties

Prevailing plaintiff may recover: (1) actual damages or up to treble damages; (2) statutory damages of $5,000–$20,000 per violation of Sections 10–13, or $10,000–$40,000 per willful/repeated violation; (3) statutory damages of $5,000–$50,000 per violation of the anti-retaliation provision (Section 14), or $10,000–$100,000 per willful/repeated violation; (4) injunctive relief; (5) equitable relief; (6) temporary relief including reinstatement for retaliation claims. Reasonable attorney's fees and costs are mandatory upon prevailing. Statutory damages are CPI-adjusted annually beginning fiscal year 2027.

Verbatim statutory text on the left; plain-language analysis and a per-section checklist on the right. Numbered markers cross-link to the matching checklist row.

Statutory Text

Analysis & Obligations

IC 22-5-10.4-1 through IC 22-5-10.4-9

Definitions

Sec. 1 As used in this chapter, "automated decision system" means a system, software, or process, including a system, software, or process derived from machine learning, statistics, or other data processing or artificial intelligence techniques, that: (1) uses computation, in whole or in part, to: (A) determine outcomes; (B) make or aid decisions, including through evaluations, metrics, or scoring; (C) inform policy implementation; or (D) collect data or observations; and (2) is not passive computing infrastructure.

Sec. 2 As used in this chapter, "automated decision system output" means any information, assumption, prediction, score, recommendation, decision, evaluation, metric, conclusion, inference, or profile generated by an automated decision system.

Sec. 3 As used in this chapter, "candidate", with respect to an employer, means an individual who applies or has applied to be employed by or otherwise perform work for remuneration for the employer.

Sec. 4 As used in this chapter, "covered individual", with respect to an employer, means an individual who is: (1) employed by or otherwise performing work for remuneration for the employer; or (2) a candidate with respect to the employer.

Sec. 5 As used in this chapter, "department" refers to the department of labor created by IC 22-1-1-1.

Sec. 6 As used in this chapter, "employ" has the meaning set forth in Section 203 of the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C. 203).

Sec. 7 As used in this chapter, "employer" means the following: (1) A sole proprietor, corporation, partnership, limited liability company, or other entity that: (A) employs; or (B) otherwise engages for the performance of work for remuneration; eleven (11) or more covered individuals. (2) A state agency (as defined in IC 22-2-20-5). (3) A political subdivision (as defined in IC 36-1-2-13). (b) The term includes: (1) any person who acts, directly or indirectly, in the interest of an employer in relation to any covered individual performing work for remuneration for the employer; and (2) any successor in interest of an employer. (c) The term does not include a labor organization (as defined in IC 22-6-6-5), other than when the labor organization acts as an employer, or anyone acting in the capacity of an officer or agent of the labor organization.

Sec. 8 As used in this chapter, "employment related decision" means a decision by an employer with regard to: (1) hiring a covered individual, including any decision with regard to recruiting, screening, interviewing, or selecting a candidate; (2) firing, retaining, taking a disciplinary action against, demoting, or reassigning duties of a covered individual; or (3) any other term, condition, or privilege of employment or work of the covered individual, such as a decision relating to pay, scheduling, health care or long term care coverage, benefits, work hours, or the promotion of a covered individual.

Sec. 9 As used in this chapter, "passive computing infrastructure" means any intermediary technology that does not: (1) influence or determine the outcome of a decision; (2) make or aid in a decision, including through evaluations, metrics, or scoring; (3) inform policy implementation; or (4) collect data or observations. (b) The term includes web hosting, domain registration, networking, caching, data storage, or cybersecurity.

Sections 1 through 9 establish the defined terms for the chapter. The automated decision system definition is notably broad, covering any computational system derived from machine learning, statistics, or AI techniques that determines outcomes, aids decisions, informs policy, or collects data — excluding only passive computing infrastructure. The employer definition covers private entities with 11 or more covered individuals plus all state agencies and political subdivisions.

IC 22-5-10.4-10

Prohibitions and conditions on employer use of automated decision systems

Deployer

(1) 1 An employer may not: (1) rely exclusively on an automated decision system in making an employment related decision with respect to a covered individual;

(2)(A) 2 and (2) use an automated decision system output in making an employment related decision with respect to a covered individual unless: (A) the automated decision system used to generate the automated decision system output has had predeployment testing and validation with respect to: (i) the efficacy of the system; (ii) the compliance of the system with applicable employment discrimination laws, including Title VII of the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621 et seq.), Title I of the Americans with Disabilities Act of 1990 (42 U.S.C. 12111 et seq.), Title II of the Genetic Information Nondiscrimination Act of 2008 (42 U.S.C. 2000ff et seq.), Section 6(d) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(d)), Sections 501 and 505 of the Rehabilitation Act of 1973 (29 U.S.C. 791 and 29 U.S.C. 793), and the Pregnant Workers Fairness Act (42 U.S.C. 2000gg); (iii) the lack of any potential discriminatory impact of the system, including discriminatory impact based on race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age, or disability, and genetic information (including family medical history); and (iv) the compliance of the system with the Artificial Intelligence Risk Management Framework released by the National Institute of Standards and Technology on January 26, 2023, or a successor framework;

(2)(B) 3 the automated decision system is, not less than annually, independently tested for discriminatory impact described in clause (A)(iii) or potential biases and the results of the test are made publicly available;

(2)(C) 4 the employer has provided the disclosures required under section 11 of this chapter with respect to the use of the automated decision system output;

(2)(D) 5 the use is designed for purposes of making the employment related decision;

(2)(E) 6 the employer independently corroborates, via meaningful oversight by a human with appropriate and relevant experience, the automated decision system output;

(2)(F) 7 not later than seven (7) days after making the employment related decision, the employer provides full, accessible, and meaningful documentation in plain language and at no cost to the covered individual on the automated decision system output, including: (i) a description of the automated decision system used to generate the automated decision system output; (ii) a description and explanation, in plain language, of the input date to the automated decision system used to generate the automated decision system output and a machine readable copy of the data; (iii) a description and explanation of how the automated decision system output was used in making the employment related decision; and (iv) the reasoning for the use of the automated decision system output in the employment related decision;

(2)(G) 8 and (G) the employer allows the covered individual to, after receiving the documentation described in clause (F): (i) dispute, in a manner that is accessible, equitable, and does not pose an unreasonable burden on the covered individual, the automated decision system output to a human with appropriate and relevant experience; and (ii) appeal the employment related decision to a human with appropriate and relevant experience who is not the human for purposes of the corroboration under clause (E).

Section 10 is the bill's core operative provision. Subsection (1) categorically prohibits employers from relying exclusively on an automated decision system for any employment-related decision. Subsection (2) permits employers to use automated decision system output only if seven cumulative conditions are satisfied: predeployment testing and validation (covering efficacy, discrimination law compliance, discriminatory impact analysis, and NIST AI RMF compliance); at least annual independent bias testing with publicly available results; required Sec. 11 disclosures; purpose limitation; meaningful human corroboration; post-decision documentation to the covered individual within seven days; and dispute/appeal rights to a human reviewer distinct from the corroborating human.

The predeployment testing requirement under clause (A) is notable for explicitly enumerating seven federal employment discrimination statutes against which the system must be validated. The annual independent testing requirement under clause (B) is among the most aggressive periodic-audit mandates in any state employment AI bill, requiring public disclosure of results.

Compliance actions 8 items

Employers must not rely exclusively on an automated decision system in making any employment-related decision with respect to a covered individual. Every such decision must involve human judgment beyond the automated system's output.

H-01.6

Employers must ensure that any automated decision system used to generate output for employment-related decisions has undergone predeployment testing and validation covering: (i) efficacy of the system; (ii) compliance with enumerated federal employment discrimination statutes (Title VII, ADEA, ADA Title I, GINA Title II, Equal Pay Act, Rehabilitation Act Sections 501/505, Pregnant Workers Fairness Act); (iii) absence of discriminatory impact based on race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age, disability, and genetic information (including family medical history); and (iv) compliance with the NIST AI Risk Management Framework (January 26, 2023) or a successor framework.

H-02.1

Employers must ensure that each automated decision system used for employment-related decisions is independently tested at least annually for discriminatory impact (based on race, color, religion, sex, national origin, age, disability, and genetic information) or potential biases, and the results of each test must be made publicly available.

H-02.6

Employers must provide the disclosures required by Section 11 of this chapter before using automated decision system output in any employment-related decision. This is a prerequisite to lawful use of the output.

H-01.3

Employers must ensure that the use of an automated decision system output is designed for the purpose of making the specific employment-related decision at issue. Output from systems designed for other purposes may not be repurposed for employment decisions.

D-01.4

Employers must independently corroborate every automated decision system output through meaningful oversight by a human with appropriate and relevant experience before using it in an employment-related decision. The human must have the authority and ability to override the automated output.

H-01.6

Employers must, within seven days after making an employment-related decision using automated decision system output, provide the covered individual with full, accessible, and meaningful documentation in plain language and at no cost, including: (i) a description of the automated decision system used; (ii) a plain-language description and explanation of the input data and a machine-readable copy of that data; (iii) a description and explanation of how the output was used in making the decision; and (iv) the reasoning for using the output in the decision.

H-01.1

Employers must allow covered individuals, after receiving post-decision documentation, to: (i) dispute the automated decision system output in a manner that is accessible, equitable, and does not impose an unreasonable burden, to a human with appropriate and relevant experience; and (ii) appeal the employment-related decision to a human with appropriate and relevant experience who is not the same human who performed the corroboration under clause (E).

H-01.4

IC 22-5-10.4-11

Pre-use disclosure requirements

Deployer

(a) 9 An employer that uses or intends to use an automated decision system output in making an employment related decision with respect to a covered individual shall, in accordance with subsections (b) and (c), disclose to the covered individual: (1) that the employer uses or intends to use an automated decision system output in making an employment related decision; (2) a description and explanation of the automated decision system used or intended to be used to generate the automated decision system output, including: (A) the types of data collected or intended to be collected as inputs to the automated decision system and the circumstances of the collection; (B) the characteristics that the automated decision system measures or is intended to measure, such as the knowledge, skills, or abilities of the covered individual; (C) how the characteristics relate or would relate to any function required for the work or potential work of the covered individual; (D) how the system measures or is intended to measure the characteristics; and (E) how the covered individual can interpret the automated decision system output in plain language; (3) the identity of the covered individual or entity that operates the automated decision system that provides the automated decision system output; (4) how the employer uses or intends to use the automated decision system output in making the employment related decision; and (5) how the covered individual may dispute or appeal an employment related decision made with respect to the covered individual using an automated decision system output.

(b)–(c) 9 An employer shall provide the disclosures required by subsection (a) to a covered individual as follows: (1) In the case of a covered individual who was hired on or before July 1, 2026, the disclosure must be provided to the covered individual not later than August 1, 2026. (2) In the case of a covered individual who is hired after July 1, 2026, the disclosure must be provided to the covered individual before hiring. (c) Not later than thirty (30) days after: (1) any information provided by an employer to a covered individual through a disclosure required by subsection (a) significantly changes; or (2) any significant new information required to be provided in the disclosure becomes available; the employer shall provide the covered individual with an updated disclosure.

Section 11 establishes detailed pre-use disclosure obligations running from employers to covered individuals. Subsection (a) enumerates five categories of information that must be disclosed: the fact of automated decision system use, a detailed description of the system (including data types, measured characteristics, job-relevance of those characteristics, measurement methodology, and plain-language interpretation guidance), the identity of the system operator, how the output will be used in the decision, and how to dispute or appeal. Subsections (b) and (c) establish timing: existing employees hired on or before July 1, 2026 must receive disclosures by August 1, 2026; future hires must receive disclosures before hiring; and any material change triggers a 30-day update obligation.

Compliance actions 1 item

Employers that use or intend to use automated decision system output in employment-related decisions must disclose to each covered individual: (1) the fact of use or intended use; (2) a description of the system, including input data types and collection circumstances, characteristics measured, job-relevance of those characteristics, measurement methodology, and plain-language interpretation guidance; (3) the identity of the entity operating the system; (4) how the output is or will be used in the decision; and (5) how the individual may dispute or appeal the decision. Existing employees hired on or before July 1, 2026 must receive disclosures by August 1, 2026. Candidates and future hires must receive disclosures before hiring. Employers must provide updated disclosures within 30 days of any significant change or new information.

H-01.1

IC 22-5-10.4-12

Operator and user training requirements

Deployer

10 An employer that uses or intends to use an automated decision system output in making an employment related decision with respect to a covered individual shall train any individual or entity that operates the automated decision system or uses the automated decision system output on: (1) the input information used by the automated decision system; (2) the appeals process for the automated decision system output; (3) potential biases in automated decision systems; (4) any limitations of the automated decision system; (5) any potential adverse effects to covered individuals due to the automated decision system; (6) any potential adverse effects to covered individuals due to the automated decision system; (7) any potential errors or problems related to the automated decision system; and (8) examples of inappropriate uses of the automated decision system.

Section 12 requires employers to train any individual or entity that operates the automated decision system or uses its output. The training must cover eight specified topics: input information, the appeals process, potential biases, system limitations, potential adverse effects to covered individuals (listed twice — appears to be a drafting error), potential errors or problems, and examples of inappropriate uses.

Compliance actions 1 item

Employers must train every individual or entity that operates the automated decision system or uses its output on: (1) the input information used by the system; (2) the appeals process for the output; (3) potential biases in automated decision systems; (4) limitations of the system; (5) potential adverse effects to covered individuals; (6) potential errors or problems related to the system; and (7) examples of inappropriate uses of the system.

G-01.7

IC 22-5-10.4-13

Opt-out right for managed employees

Deployer

11 An employer that manages a covered individual through an automated decision system shall allow the covered individual to: (1) opt out of the management through the automated decision system; and (2) be managed through a human manager who is able to make employment related decisions with respect to the covered individual.

Section 13 grants covered individuals who are managed through an automated decision system the right to opt out entirely and instead be managed by a human manager capable of making employment-related decisions. This goes beyond the dispute/appeal rights in Section 10(2)(G) — it is an ongoing operational right to exit automated management entirely, not merely to contest a specific decision.

Compliance actions 1 item

Employers that manage covered individuals through an automated decision system must allow each covered individual to opt out of automated management and instead be managed by a human manager who is able to make employment-related decisions with respect to that individual.

D-01.3

IC 22-5-10.4-14

Anti-retaliation protections

Deployer

12 An employer may not discriminate or retaliate, including through intimidation, threats, coercion, or harassment, against any covered individual: (1) for exercising or attempting to exercise any right provided under this chapter; or (2) because the covered individual or another individual acting at the request of the covered individual has: (A) filed a written or oral complaint to the employer or a federal, state, or local government entity of a violation of this chapter; (B) sought assistance or intervention with respect to a worker privacy related concern from the employer, a federal, state, or local government, or a worker representative; (C) instituted, caused to be instituted, or otherwise participated in any inquiry or proceeding under this chapter; (D) given, or is about to give, any information in connection with any inquiry or proceeding relating to any right provided under this chapter; or (E) testified, or is about to testify, in any inquiry or proceeding relating to any right provided under this chapter.

Section 14 prohibits employers from discriminating or retaliating against covered individuals for exercising rights under the chapter or for filing complaints, seeking assistance, participating in proceedings, providing information, or testifying regarding rights under the chapter. The prohibition extends to actions taken by others at the covered individual's request. Protected activities include both internal complaints and complaints to government entities.

Compliance actions 1 item

Employers must not discriminate or retaliate — including through intimidation, threats, coercion, or harassment — against any covered individual for exercising or attempting to exercise rights under this chapter, or because the individual (or someone acting at the individual's request) has filed a complaint, sought assistance, participated in a proceeding, given information, or testified regarding any right under this chapter.

G-03.3

IC 22-5-10.4-15

Department of Labor enforcement powers

Deployer

(a) 13 The department may do the following: (1) Receive complaints regarding alleged violations of this chapter. (2) Investigate any facts, conditions, practices, or matters as the department deems necessary or appropriate to determine whether an employer has violated this chapter. (3) Require an employer to file with the department, on a form prescribed by the department, annual or special reports or answers in writing to specific questions relating to the use of an automated decision system for employment related decisions.

(b)–(c) 13 If the department requires an employer to file a report or answers under subsection (a)(3), the employer shall file the report or answers in the manner and time period required by the department. (c) An employer shall maintain, keep, preserve, and make available to the department records pertaining to compliance with this chapter.

Section 15 grants the Indiana Department of Labor authority to receive complaints, investigate potential violations, and require employers to file annual or special reports on their use of automated decision systems for employment decisions. Employers must maintain and make available compliance records to the department. This section creates regulatory reporting obligations but no direct compliance obligation on the substantive use of automated systems.

Compliance actions 1 item

Employers must file annual or special reports with the Indiana Department of Labor when required, on prescribed forms, answering specific questions about their use of automated decision systems for employment decisions. Employers must also maintain, keep, preserve, and make available to the department all records pertaining to compliance with this chapter.

R-02.2

IC 22-5-10.4-16

Private right of action and remedies

(a)–(f) Regardless of whether any action is taken by the department under section 15 of this chapter, a: (1) covered individual; or (2) labor organization; that is adversely affected by an alleged violation of this chapter may bring a civil action against any person that violates this chapter. (b) In a civil action brought under subsection (a) in which the covered individual or labor organization prevails, the court may award any of the following to the covered individual or labor organization: (1) Damages of: (A) an amount equal to the sum of any actual damages sustained by the covered individual or labor organization; or (B) not more than treble damages. (2) Statutory damages described in subsection (d). (3) Injunctive relief. (4) Equitable relief. (5) For a civil action regarding a violation of section 14 of this chapter, temporary relief while the case is pending, including reinstatement. (c) In a civil action brought under subsection (a) in which the covered individual or labor organization prevails, the court shall award the covered individual or labor organization reasonable attorney's fees and costs. (d) The court may, in accordance with subsection (b)(2) and subject to subsections (e) and (f), award statutory damages against a person in the following amounts: (1) For each violation of sections 10 through 13 of this chapter, the court may award: (A) damages of at least five thousand dollars ($5,000) and not more than twenty thousand dollars ($20,000); or (B) for any willful or repeated violation by an employer, damages of at least ten thousand dollars ($10,000) and not more than forty thousand dollars ($40,000). (2) For each violation of section 14 of this chapter, the court may award: (A) damages of at least five thousand dollars ($5,000) and not more than fifty thousand dollars ($50,000); or (B) for any willful or repeated violation, damages of at least ten thousand dollars ($10,000) and not more than one hundred thousand dollars ($100,000). (e) In determining the amount of statutory damages assessed under subsection (d), the court shall consider any relevant circumstances presented by the parties to the action, including: (1) the nature and seriousness of the violation; (2) the number of violations; (3) the persistence of the misconduct; (4) the length of time over which the misconduct occurred; (5) the willfulness of the misconduct; and (6) the assets, liabilities, and net worth of the employer. (f) The amounts referred to in subsection (d) must be increased annually, for fiscal year 2027 and every fiscal year thereafter, by the percent increase, if any, in the Consumer Price Index for All Urban Consumers for the most recent twelve (12) month period for which applicable data is available.

Section 16 creates a private right of action for covered individuals and labor organizations adversely affected by violations. Prevailing plaintiffs may recover actual damages or up to treble damages, statutory damages (ranging from $5,000–$20,000 per violation, or $10,000–$40,000 per willful/repeated violation of Sections 10–13; and $5,000–$50,000, or $10,000–$100,000 per willful/repeated violation of the anti-retaliation provision), injunctive relief, equitable relief, and temporary relief including reinstatement for retaliation claims. Reasonable attorney's fees and costs are mandatory upon prevailing. Statutory damage amounts are CPI-adjusted annually beginning FY 2027.

IC 22-5-10.4-17

Pre-suit notice to Department of Labor

Before a covered individual or labor organization brings an action under section 16 of this chapter, the covered individual or labor organization shall, in writing, notify the department of the intent to commence the civil action. (b) Upon receiving notice under subsection (a), the department shall, not later than sixty (60) days after receiving the notice: (1) decide whether to intervene in the action; and (2) notify the covered individual or labor organization of the department's decision under subdivision (1). (c) If the department decides to intervene in an action, the court shall allow the department to do the following upon intervening: (1) Be heard on all matters arising in the action. (2) File petitions for appeal of a decision in the action.

Section 17 establishes a procedural prerequisite to private litigation: the covered individual or labor organization must provide written notice to the Department of Labor before filing suit. The department then has 60 days to decide whether to intervene and must notify the plaintiff of its decision. If the department intervenes, the court must allow it to be heard on all matters and to file appeals.

IC 22-5-10.4-18

Rulemaking authority

The department may adopt rules under IC 4-22-2 to implement this chapter.

Section 18 grants the Department of Labor authority to adopt rules under IC 4-22-2 to implement this chapter. This is a standard rulemaking delegation that creates no independent compliance obligation.

Data Controls Data sale restrictions · deidentification

2 items

D-01.4

D-01.3