HB 1421

                                                          Introduced Version
           HOUSE BILL No. 1421
                 _____
              DIGEST OF INTRODUCED BILL
Citations Affected: IC 22-5-10.4.
Synopsis: Ban on employer use of automated decision systems.
Prohibits an employer from: (1) relying exclusively on an automated
decision system in making an employment related decision with respect
to a covered individual; (2) using an automated decision system output
in making an employment related decision with respect to a covered
individual unless certain conditions are met; and (3) discriminating or
retaliating against a covered individual for exercising rights under these
provisions. Sets forth disclosure requirements for an employer that uses
or intends to use an automated decision system output in making an
employment related decision. Allows the department of labor to take
certain enforcement actions. Allows a covered individual or labor
organization to bring a civil action for a violation.
Effective: July 1, 2026.
                               Harris
   January 8, 2026, read first time and referred to Committee on Employment, Labor and
Pensions.
2026  IN 1421—LS 6608/DI 141
                                                                                       Introduced
            Second Regular Session of the 124th General Assembly (2026)
 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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                   HOUSE BILL No. 1421
    A BILL FOR AN ACT to amend the Indiana Code concerning labor
 and safety.
     Be it enacted by the General Assembly of the State of Indiana:
1    SECTION 1. IC 22-5-10.4 IS ADDED TO THE INDIANA CODE
2 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
3 JULY 1, 2026]:
4    Chapter 10.4. Use of Automated Decision System for
5 Employment Related Decisions
6    Sec. 1. As used in this chapter, "automated decision system"
7 means a system, software, or process, including a system, software,
8 or process derived from machine learning, statistics, or other data
9 processing or artificial intelligence techniques, that:
10      (1) uses computation, in whole or in part, to:
11(A) determine outcomes;
12(B) make or aid decisions, including through evaluations,
13metrics, or scoring;
14(C) inform policy implementation; or
15(D) collect data or observations; and
16      (2) is not passive computing infrastructure.
17    Sec. 2. As used in this chapter, "automated decision system
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                                  2
1 output" means any information, assumption, prediction, score,
2 recommendation, decision, evaluation, metric, conclusion,
3 inference, or profile generated by an automated decision system.
4    Sec. 3. As used in this chapter, "candidate", with respect to an
5 employer, means an individual who applies or has applied to be
6 employed by or otherwise perform work for remuneration for the
7 employer.
8    Sec. 4. As used in this chapter, "covered individual", with
9 respect to an employer, means an individual who is:
10      (1) employed by or otherwise performing work for
11      remuneration for the employer; or
12      (2) a candidate with respect to the employer.
13    Sec. 5. As used in this chapter, "department" refers to the
14 department of labor created by IC 22-1-1-1.
15    Sec. 6. As used in this chapter, "employ" has the meaning set
16 forth in Section 203 of the federal Fair Labor Standards Act of
17 1938, as amended (29 U.S.C. 203).
18    Sec. 7. (a) As used in this chapter, "employer" means the
19 following:
20      (1) A sole proprietor, corporation, partnership, limited
21      liability company, or other entity that:
22(A) employs; or
23(B) otherwise engages for the performance of work for
24remuneration;
25      eleven (11) or more covered individuals.
26      (2) A state agency (as defined in IC 22-2-20-5).
27      (3) A political subdivision (as defined in IC 36-1-2-13).
28    (b) The term includes:
29      (1) any person who acts, directly or indirectly, in the interest
30      of an employer in relation to any covered individual
31      performing work for remuneration for the employer; and
32      (2) any successor in interest of an employer.
33    (c) The term does not include a labor organization (as defined
34 in IC 22-6-6-5), other than when the labor organization acts as an
35 employer, or anyone acting in the capacity of an officer or agent of
36 the labor organization.
37    Sec. 8. As used in this chapter, "employment related decision"
38 means a decision by an employer with regard to:
39      (1) hiring a covered individual, including any decision with
40      regard to recruiting, screening, interviewing, or selecting a
41      candidate;
42      (2) firing, retaining, taking a disciplinary action against,
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1      demoting, or reassigning duties of a covered individual; or
2      (3) any other term, condition, or privilege of employment or
3      work of the covered individual, such as a decision relating to
4      pay, scheduling, health care or long term care coverage,
5      benefits, work hours, or the promotion of a covered
6      individual.
7    Sec. 9. (a) As used in this chapter, "passive computing
8 infrastructure" means any intermediary technology that does not:
9      (1) influence or determine the outcome of a decision;
10      (2) make or aid in a decision, including through evaluations,
11      metrics, or scoring;
12      (3) inform policy implementation; or
13      (4) collect data or observations.
14    (b) The term includes web hosting, domain registration,
15 networking, caching, data storage, or cybersecurity.
16    Sec. 10. An employer may not:
17      (1) rely exclusively on an automated decision system in
18      making an employment related decision with respect to a
19      covered individual; and
20      (2) use an automated decision system output in making an
21      employment related decision with respect to a covered
22      individual unless:
23(A) the automated decision system used to generate the
24automated decision system output has had predeployment
25testing and validation with respect to:
26(i) the efficacy of the system;
27(ii) the compliance of the system with applicable
28employment discrimination laws, including Title VII of
29the Civil Rights Act of 1964 (42 U.S.C. 2000e et seq.), the
30Age Discrimination in Employment Act of 1967 (29
31U.S.C. 621 et seq.), Title I of the Americans with
32Disabilities Act of 1990 (42 U.S.C. 12111 et seq.), Title II
33of the Genetic Information Nondiscrimination Act of
342008 (42 U.S.C. 2000ff et seq.), Section 6(d) of the Fair
35Labor Standards Act of 1938 (29 U.S.C. 206(d)), Sections
36501 and 505 of the Rehabilitation Act of 1973 (29 U.S.C.
37791 and 29 U.S.C. 793), and the Pregnant Workers
38Fairness Act (42 U.S.C. 2000gg);
39(iii) the lack of any potential discriminatory impact of
40the system, including discriminatory impact based on
41race, color, religion, sex (including pregnancy, sexual
42orientation, or gender identity), national origin, age, or
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1disability, and genetic information (including family
2medical history); and
3(iv) the compliance of the system with the Artificial
4Intelligence Risk Management Framework released by
5the National Institute of Standards and Technology on
6January 26, 2023, or a successor framework;
7(B) the automated decision system is, not less than
8annually, independently tested for discriminatory impact
9described in clause (A)(iii) or potential biases and the
10results of the test are made publicly available;
11(C) the employer has provided the disclosures required
12under section 11 of this chapter with respect to the use of
13the automated decision system output;
14(D) the use is designed for purposes of making the
15employment related decision;
16(E) the employer independently corroborates, via
17meaningful oversight by a human with appropriate and
18relevant experience, the automated decision system output;
19(F) not later than seven (7) days after making the
20employment related decision, the employer provides full,
21accessible, and meaningful documentation in plain
22language and at no cost to the covered individual on the
23automated decision system output, including:
24(i) a description of the automated decision system used to
25generate the automated decision system output;
26(ii) a description and explanation, in plain language, of
27the input date to the automated decision system used to
28generate the automated decision system output and a
29machine readable copy of the data;
30(iii) a description and explanation of how the automated
31decision system output was used in making the
32employment related decision; and
33(iv) the reasoning for the use of the automated decision
34system output in the employment related decision; and
35(G) the employer allows the covered individual to, after
36receiving the documentation described in clause (F):
37(i) dispute, in a manner that is accessible, equitable, and
38does not pose an unreasonable burden on the covered
39individual, the automated decision system output to a
40human with appropriate and relevant experience; and
41(ii) appeal the employment related decision to a human
42with appropriate and relevant experience who is not the
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1human for purposes of the corroboration under clause
2(E).
3    Sec. 11. (a) An employer that uses or intends to use an
4 automated decision system output in making an employment
5 related decision with respect to a covered individual shall, in
6 accordance with subsections (b) and (c), disclose to the covered
7 individual:
8      (1) that the employer uses or intends to use an automated
9      decision system output in making an employment related
10      decision;
11      (2) a description and explanation of the automated decision
12      system used or intended to be used to generate the automated
13      decision system output, including:
14(A) the types of data collected or intended to be collected
15as inputs to the automated decision system and the
16circumstances of the collection;
17(B) the characteristics that the automated decision system
18measures or is intended to measure, such as the knowledge,
19skills, or abilities of the covered individual;
20(C) how the characteristics relate or would relate to any
21function required for the work or potential work of the
22covered individual;
23(D) how the system measures or is intended to measure the
24characteristics; and
25(E) how the covered individual can interpret the
26automated decision system output in plain language;
27      (3) the identity of the covered individual or entity that
28      operates the automated decision system that provides the
29      automated decision system output;
30      (4) how the employer uses or intends to use the automated
31      decision system output in making the employment related
32      decision; and
33      (5) how the covered individual may dispute or appeal an
34      employment related decision made with respect to the covered
35      individual using an automated decision system output.
36    (b) An employer shall provide the disclosures required by
37 subsection (a) to a covered individual as follows:
38      (1) In the case of a covered individual who was hired on or
39      before July 1, 2026, the disclosure must be provided to the
40      covered individual not later than August 1, 2026.
41      (2) In the case of a covered individual who is hired after July
42      1, 2026, the disclosure must be provided to the covered
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1      individual before hiring.
2    (c) Not later than thirty (30) days after:
3      (1) any information provided by an employer to a covered
4      individual through a disclosure required by subsection (a)
5      significantly changes; or
6      (2) any significant new information required to be provided
7      in the disclosure becomes available;
8 the employer shall provide the covered individual with an updated
9 disclosure.
10    Sec. 12. An employer that uses or intends to use an automated
11 decision system output in making an employment related decision
12 with respect to a covered individual shall train any individual or
13 entity that operates the automated decision system or uses the
14 automated decision system output on:
15      (1) the input information used by the automated decision
16      system;
17      (2) the appeals process for the automated decision system
18      output;
19      (3) potential biases in automated decision systems;
20      (4) any limitations of the automated decision system;
21      (5) any potential adverse effects to covered individuals due to
22      the automated decision system;
23      (6) any potential adverse effects to covered individuals due to
24      the automated decision system;
25      (7) any potential errors or problems related to the automated
26      decision system; and
27      (8) examples of inappropriate uses of the automated decision
28      system.
29    Sec. 13. An employer that manages a covered individual through
30 an automated decision system shall allow the covered individual to:
31      (1) opt out of the management through the automated
32      decision system; and
33      (2) be managed through a human manager who is able to
34      make employment related decisions with respect to the
35      covered individual.
36    Sec. 14. An employer may not discriminate or retaliate,
37 including through intimidation, threats, coercion, or harassment,
38 against any covered individual:
39      (1) for exercising or attempting to exercise any right provided
40      under this chapter; or
41      (2) because the covered individual or another individual
42      acting at the request of the covered individual has:
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1(A) filed a written or oral complaint to the employer or a
2federal, state, or local government entity of a violation of
3this chapter;
4(B) sought assistance or intervention with respect to a
5worker privacy related concern from the employer, a
6federal, state, or local government, or a worker
7representative;
8(C) instituted, caused to be instituted, or otherwise
9participated in any inquiry or proceeding under this
10chapter;
11(D) given, or is about to give, any information in
12connection with any inquiry or proceeding relating to any
13right provided under this chapter; or
14(E) testified, or is about to testify, in any inquiry or
15proceeding relating to any right provided under this
16chapter.
17    Sec. 15. (a) The department may do the following:
18(1) Receive complaints regarding alleged violations of this
19chapter.
20(2) Investigate any facts, conditions, practices, or matters as
21the department deems necessary or appropriate to determine
22whether an employer has violated this chapter.
23(3) Require an employer to file with the department, on a
24form prescribed by the department, annual or special reports
25or answers in writing to specific questions relating to the use
26of an automated decision system for employment related
27decisions.
28    (b) If the department requires an employer to file a report or
29 answers under subsection (a)(3), the employer shall file the report
30 or answers in the manner and time period required by the
31 department.
32    (c) An employer shall maintain, keep, preserve, and make
33 available to the department records pertaining to compliance with
34 this chapter.
35    Sec. 16. (a) Regardless of whether any action is taken by the
36 department under section 15 of this chapter, a:
37(1) covered individual; or
38(2) labor organization;
39 that is adversely affected by an alleged violation of this chapter
40 may bring a civil action against any person that violates this
41 chapter.
42    (b) In a civil action brought under subsection (a) in which the
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1 covered individual or labor organization prevails, the court may
2 award any of the following to the covered individual or labor
3 organization:
4      (1) Damages of:
5(A) an amount equal to the sum of any actual damages
6sustained by the covered individual or labor organization;
7or
8(B) not more than treble damages.
9      (2) Statutory damages described in subsection (d).
10      (3) Injunctive relief.
11      (4) Equitable relief.
12      (5) For a civil action regarding a violation of section 14 of this
13      chapter, temporary relief while the case is pending, including
14      reinstatement.
15    (c) In a civil action brought under subsection (a) in which the
16 covered individual or labor organization prevails, the court shall
17 award the covered individual or labor organization reasonable
18 attorney's fees and costs.
19    (d) The court may, in accordance with subsection (b)(2) and
20 subject to subsections (e) and (f), award statutory damages against
21 a person in the following amounts:
22      (1) For each violation of sections 10 through 13 of this
23      chapter, the court may award:
24(A) damages of at least five thousand dollars ($5,000) and
25not more than twenty thousand dollars ($20,000); or
26(B) for any willful or repeated violation by an employer,
27damages of at least ten thousand dollars ($10,000) and not
28more than forty thousand dollars ($40,000).
29      (2) For each violation of section 14 of this chapter, the court
30      may award:
31(A) damages of at least five thousand dollars ($5,000) and
32not more than fifty thousand dollars ($50,000); or
33(B) for any willful or repeated violation, damages of at
34least ten thousand dollars ($10,000) and not more than one
35hundred thousand dollars ($100,000).
36    (e) In determining the amount of statutory damages assessed
37 under subsection (d), the court shall consider any relevant
38 circumstances presented by the parties to the action, including:
39      (1) the nature and seriousness of the violation;
40      (2) the number of violations;
41      (3) the persistence of the misconduct;
42      (4) the length of time over which the misconduct occurred;
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1      (5) the willfulness of the misconduct; and
2      (6) the assets, liabilities, and net worth of the employer.
3    (f) The amounts referred to in subsection (d) must be increased
4 annually, for fiscal year 2027 and every fiscal year thereafter, by
5 the percent increase, if any, in the Consumer Price Index for All
6 Urban Consumers for the most recent twelve (12) month period for
7 which applicable data is available.
8    Sec. 17. (a) Before a covered individual or labor organization
9 brings an action under section 16 of this chapter, the covered
10 individual or labor organization shall, in writing, notify the
11 department of the intent to commence the civil action.
12    (b) Upon receiving notice under subsection (a), the department
13 shall, not later than sixty (60) days after receiving the notice:
14      (1) decide whether to intervene in the action; and
15      (2) notify the covered individual or labor organization of the
16      department's decision under subdivision (1).
17    (c) If the department decides to intervene in an action, the court
18 shall allow the department to do the following upon intervening:
19      (1) Be heard on all matters arising in the action.
20      (2) File petitions for appeal of a decision in the action.
21    Sec. 18. The department may adopt rules under IC 4-22-2 to
22 implement this chapter.
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