HB-1421
IN · State · USA
IN
USA
● Pending
Proposed Effective Date
2026-07-01
Indiana House Bill No. 1421 — Ban on Employer Use of Automated Decision Systems (IC 22-5-10.4)
Regulates employer use of automated decision systems in employment decisions including hiring, firing, pay, scheduling, benefits, and promotions. Applies to employers with 11 or more covered individuals, state agencies, and political subdivisions. Prohibits employers from relying exclusively on automated systems for employment decisions and imposes seven conditions for permissible use of automated decision system outputs, including predeployment testing for efficacy and discrimination, annual independent bias audits with public results, mandatory human corroboration, and post-decision documentation and appeal rights. Requires comprehensive pre-employment and ongoing disclosures to covered individuals. Creates a private right of action for covered individuals and labor organizations with statutory damages of $5,000–$100,000 per violation and mandatory attorney's fees, plus Department of Labor complaint and investigation authority.
Summary

Regulates employer use of automated decision systems in employment decisions including hiring, firing, pay, scheduling, benefits, and promotions. Applies to employers with 11 or more covered individuals, state agencies, and political subdivisions. Prohibits employers from relying exclusively on automated systems for employment decisions and imposes seven conditions for permissible use of automated decision system outputs, including predeployment testing for efficacy and discrimination, annual independent bias audits with public results, mandatory human corroboration, and post-decision documentation and appeal rights. Requires comprehensive pre-employment and ongoing disclosures to covered individuals. Creates a private right of action for covered individuals and labor organizations with statutory damages of $5,000–$100,000 per violation and mandatory attorney's fees, plus Department of Labor complaint and investigation authority.

Enforcement & Penalties
Enforcement Authority
Dual enforcement. The Indiana Department of Labor may receive complaints, investigate violations, and require employers to file reports or answers. A covered individual or labor organization that is adversely affected by a violation may bring a civil action against any person that violates the chapter, regardless of whether the Department has taken action. Before filing suit, the plaintiff must provide written notice to the Department, which then has 60 days to decide whether to intervene.
Penalties
Prevailing plaintiffs 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 or repeated violation of those sections; (3) statutory damages of $5,000–$50,000 per violation of Section 14 (retaliation), or $10,000–$100,000 per willful or repeated retaliation violation; (4) injunctive relief; (5) equitable relief; (6) temporary relief including reinstatement for retaliation claims; and (7) mandatory reasonable attorney's fees and costs. Statutory damages do not require proof of actual monetary harm. Statutory damage amounts are adjusted annually for CPI-U beginning fiscal year 2027.
Who Is Covered
"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.
What Is Covered
"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.
Compliance Obligations 12 obligations · click obligation ID to open requirement page
H-01 Human Oversight of Automated Decisions · H-01.6 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(1)
Plain Language
Employers are categorically prohibited from relying exclusively on an automated decision system to make any employment-related decision — including hiring, firing, discipline, pay, scheduling, benefits, and promotion. A human must always be meaningfully involved in the decision. This is an absolute prohibition with no exceptions or safe harbors.
Statutory Text
An employer may not: (1) rely exclusively on an automated decision system in making an employment related decision with respect to a covered individual;
H-02 Non-Discrimination & Bias Assessment · H-02.1H-02.2H-02.3 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(A)
Plain Language
Before using any automated decision system output in an employment decision, the employer must ensure the system has undergone predeployment testing and validation covering four areas: (1) system efficacy, (2) compliance with all enumerated federal employment discrimination statutes (Title VII, ADEA, ADA Title I, GINA Title II, EPA, Rehabilitation Act, and PWFA), (3) absence of discriminatory impact across race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age, disability, and genetic information, and (4) compliance with the NIST AI Risk Management Framework or its successor. All four conditions must be satisfied before any ADS output may be used.
Statutory Text
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;
H-02 Non-Discrimination & Bias Assessment · H-02.6H-02.7H-02.8 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(B)
Plain Language
As an ongoing condition of lawful use, the automated decision system must be independently tested at least annually for discriminatory impact across the protected characteristics listed in the predeployment requirements (race, color, religion, sex, national origin, age, disability, genetic information) and for potential biases. The results of each annual test must be made publicly available. 'Independently tested' implies a third party with no material relationship to the employer, though the statute does not specify auditor qualifications.
Statutory Text
(B) 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;
H-01 Human Oversight of Automated Decisions · H-01.6 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(E)
Plain Language
Each time an employer uses an ADS output in an employment decision, a human with appropriate and relevant experience must independently corroborate the output through meaningful oversight. This is not a rubber-stamp — the human must have the qualifications and practical authority to override the ADS output. This requirement applies at the point of each decision, not merely as a periodic review.
Statutory Text
(E) the employer independently corroborates, via meaningful oversight by a human with appropriate and relevant experience, the automated decision system output;
H-01 Human Oversight of Automated Decisions · H-01.1H-01.2 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(F)
Plain Language
Within seven days of making any employment decision informed by an ADS output, the employer must provide the affected individual with comprehensive, free, plain-language documentation covering: a description of the ADS used, the input data (including a machine-readable copy), how the ADS output was used in the decision, and the employer's reasoning for relying on it. This is a post-decision explanation right — distinct from the pre-decision disclosure under Section 11 — and it is triggered automatically, not upon request.
Statutory Text
(F) 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;
H-01 Human Oversight of Automated Decisions · H-01.4H-01.5 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(G)
Plain Language
After receiving the post-decision documentation under clause (F), the covered individual has two distinct rights: (1) the right to dispute the ADS output itself to a qualified human reviewer, through a process that must be accessible, equitable, and not unreasonably burdensome; and (2) the right to appeal the overall employment decision to a different qualified human — one who was not the corroborating human under clause (E). The two-reviewer separation requirement is a structural independence safeguard preventing the same person from both corroborating the initial output and deciding the appeal.
Statutory Text
(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).
H-01 Human Oversight of Automated Decisions · H-01.3 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-11(a)-(c)
Plain Language
Employers must proactively disclose detailed information to covered individuals before or at the start of employment. The disclosure covers five categories: (1) that ADS outputs are or will be used; (2) a detailed description of the system including data inputs, measured characteristics, their job-relevance, measurement methodology, and plain-language interpretation guidance; (3) the identity of the system operator; (4) how ADS outputs factor into employment decisions; and (5) how to dispute or appeal decisions. For existing employees as of July 1, 2026, the disclosure must be provided by August 1, 2026. For new hires, it must be provided before hiring. Updated disclosures are required within 30 days of any significant change.
Statutory Text
Sec. 11. (a) 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) 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.
Other · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-12
Plain Language
Employers must train every person or entity that operates the ADS or uses its outputs on eight topics: system inputs, the appeals process, potential biases, system limitations, potential adverse effects on covered individuals (listed twice — likely a drafting error), potential errors or problems, and examples of inappropriate use. This training obligation is ongoing — it applies to anyone who operates or uses the system, presumably including new operators. The training must cover both technical understanding and practical risk awareness.
Statutory Text
Sec. 12. 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.
D-01 Automated Processing Rights & Data Controls · D-01.3 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-13
Plain Language
When an employer uses an automated decision system to manage a covered individual on an ongoing basis (as distinct from a one-time employment decision), the individual has the right to opt out entirely and be managed by a human manager who has authority to make employment decisions. This is an unconditional opt-out right — there are no stated exceptions. The employer must provide a human alternative, not merely disable certain ADS features.
Statutory Text
Sec. 13. 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.
G-03 Whistleblower & Anti-Retaliation Protections · G-03.3 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-14
Plain Language
Employers are prohibited from retaliating — including through intimidation, threats, coercion, or harassment — against any covered individual who exercises rights under this chapter, files a complaint (internally or to government), seeks assistance on worker privacy concerns, participates in proceedings, provides information, or testifies. The anti-retaliation protection extends to individuals acting at the covered individual's request and covers prospective witnesses ('is about to give' or 'is about to testify'). Violations carry enhanced statutory damages ($5,000–$100,000 per violation).
Statutory Text
Sec. 14. 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.
R-02 Regulatory Disclosure & Submissions · R-02.2 · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-15
Plain Language
The Department of Labor has authority to receive complaints, investigate potential violations, and require employers to file annual or special reports on their ADS use in employment decisions. When the Department requires a report, the employer must comply within the Department's specified timeframe and format. Separately, employers have a standing obligation to maintain and preserve all records pertaining to chapter compliance and make them available to the Department — this is a continuous recordkeeping duty, not triggered by a specific request.
Statutory Text
Sec. 15. (a) 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) 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.
H-01 Human Oversight of Automated Decisions · Deployer · EmploymentAutomated Decisionmaking
IC 22-5-10.4-10(2)(D)
Plain Language
As a condition of lawfully using an ADS output in an employment decision, the employer must ensure the system's use is designed for the specific purpose of making the type of employment decision at hand. An employer may not repurpose an ADS designed for one context (e.g., customer analytics) to make employment decisions. This is a purpose-limitation requirement ensuring the ADS was intended and validated for the employment context in which it is being applied.
Statutory Text
(D) the use is designed for purposes of making the employment related decision;