What AI hiring rules apply to a tech staffing firm?

It depends where your candidates, jobs and offices are. New York City requires bias audits and notices, Illinois and California cover AI-driven discrimination, and Colorado’s law starts January 1, 2027. Keep a recruiter deciding, tell candidates, test for bias and keep records. Guava’s $25,000 AI Rollout keeps a recruiter deciding; your lawyer confirms the rest.

By Romeo Diaz, founder of Guava · Updated October 30, 2026

Four places to know

New York City: Local Law 144 It covers employers and employment agencies using a tool that substantially assists or replaces discretionary hiring decisions, for a job tied to a city office or when the agency using it is in the city. The tool needs a bias audit within the past year and a public summary of the results, and candidates living in the city get notice at least 10 business days before use.
Illinois: HB 3773 In force since January 1, 2026, it amends the Illinois Human Rights Act. Employers can’t use AI that has the effect of discriminating in recruitment, hiring and other decisions, can’t use zip codes as a proxy for protected classes, and must give notice that they use AI. It’s written for employers, so ask your lawyer how it reaches placements you make. The state’s notice rules were proposed and then postponed in 2026, so check where they stand.
California: FEHA regulations In effect since October 1, 2025. They reach systems that facilitate human decisions, not only fully automated ones, and an employer’s “agent” includes companies hired to recruit and screen applicants. Automated-decision data has to be kept at least four years, and whether you tested for bias counts in a discrimination claim.
Colorado: SB 26-189 It takes effect January 1, 2027 and replaced the state’s 2024 AI Act. It requires clear notice before AI materially influences a decision such as hiring, and a chance at meaningful human review after a bad outcome when commercially reasonable. The attorney general enforces it, and it creates no new private right to sue. Rules are still to come.

What to do wherever you recruit

Know what you’re running List every AI tool that touches a candidate, including the scoring built into your ATS and anything recruiters use on their own.
Keep a recruiter deciding AI ranks and drafts; recruiters decide. That doesn’t take you outside these rules, and it’s still the right design.
Tell candidates A plain notice in the job posting and on your careers page, reviewed by your lawyer for each place you recruit.
Test for bias Check who gets ranked up and down, and act on what you find. Ask vendors for their bias audits.
Keep records Keep what went in, what came out and what was decided. California’s four years is a sensible floor.
Leave out proxies No zip codes, and nothing else that can stand in for a protected class.
Settle it with clients Your contract should say who is responsible for what when you screen on a client’s behalf.

How to read this page

I’m an engineer, not a lawyer, and this isn’t legal advice. I last checked these rules on October 30, 2026 against the linked sources, some of which are law-firm summaries. They’re changing quickly and other places have their own, so have your lawyer confirm what applies to you before you switch anything on.

How Guava does it

AI Assessment $4,000, 2 weeks. Inventories the AI tools already touching candidates and ranks your workflows. Auto-rejecting candidates gets Don’t build. How to screen with AI
AI Rollout $25,000, 3–6 weeks. Screening and submittals built so a recruiter decides, with the reasons shown.
Ongoing Optimization & Governance $4,000 a month, cancel anytime. An acceptable-use policy, an inventory of AI tools, connectors and agents, access reviews and a quarterly review, which your team learns to run itself.

Fixed fees, agreed in writing before work starts, and you own everything built. See the engagements

Questions staffing owners ask

If a recruiter makes the final call, do these rules still apply?

Often, yes. New York City’s law reaches tools that substantially assist or replace discretionary decision-making, and California’s rules cover systems that facilitate human decisions. Have your lawyer check your setup.

Does this cover the AI built into our ATS?

It can. These rules look at what a tool does, whoever built it. Ask your vendor what it scores and for its bias testing.

Whose law applies when the client is in another state?

It can turn on where the candidate lives, where the job is, or where you do business, depending on the law. That’s a question for your lawyer.

Can Guava tell us whether we comply?

No. I’m not a lawyer. I can show what your AI tools do and build workflows that keep a recruiter deciding, and your lawyer decides whether that’s enough.

Talk it through.

Twenty minutes on what AI already touches your candidates. Prefer email? romeo@workwithguava.com

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