As we begin the final month of 2025, it is a good time to look ahead to 2026 and prepare for changes that are coming as a result of legislation passed this year.
As always, I do not give specific legal, accounting, human resources, or tax advice. Chamber Members should consult their own professionals for guidance in these areas.
That being said, here are some issues you should be aware of that could impact your businesses due to laws that go into effect on January 1, 2026:
Artificial Intelligence (AI)
Illinois’ new AI Employment Law governs how employers use AI in hiring and other employment decisions. AI is defined broadly and includes not only generative AI but any machine-based system that generates outputs influencing employment decisions, with no specific exemptions provided. It applies to all employers, employment agencies, and labor organizations within Illinois that use AI for decisions like hiring, promotion, discharge, and other terms of employment. The new law applies to all Illinois workers, even if the company has no physical presence in the state, and covers any AI system that influences employment outcomes.
The law requires organizations to prevent discrimination by ensuring AI tools do not produce biased outcomes against protected classes, and to notify employees and applicants when AI is used in employment decisions, explaining its purpose and what characteristics it evaluates.
Organizations using AI—whether built in-house or from third-party vendors—should review tools for potential bias, ensure required notices are provided, and adopt AI governance policies and training to support compliant use. No formal impact assessments are mandated. The law is enforced by the Illinois Department of Human Rights and the Human Rights Commission, and does not create a private right of action.
Digital Voice & Likeness Protection (HB 3178)
Amends the Digital Voice & Likeness Protection Act to clarify how “digital replicas” (AI-generated likeness) can be used under contracts. If a contract doesn’t include a reasonably specific description of how a digital replica will be used, certain uses may be unenforceable — unless the uses are consistent with the original performance terms. Relevant for companies using or licensing AI-generated voices/images: media, marketing, entertainment, etc.
Expanded Leave Entitlements:
HB 1616 (Public Act 104-0193) amends the Employee Blood and Organ Donation Leave Act to allow part-time employees to take leave for organ donation. Previously, only full-time employees could use leave time for organ donation.
SB 0212 (Public Act 104-0076) amends the Nursing Mothers in the Workplace Act to require employers to provide nursing mothers reasonable break time compensated at the employee’s regular rate of compensation. This amendment makes clear that an employer is prohibited from requiring an employee to use paid leave or otherwise reducing the employee’s compensation during this break time.
SB 0220 (Public Act 104-0078) amends the Family Military Leave Act, now titled “The Military Leave Act,” to require employers with fifty-one or more employees to provide employees up to eight hours per calendar month to participate in a funeral honors detail, up to a total of forty hours per year. An employee qualifies for this leave if the employee (1) is trained to participate in a funeral honors detail; and (2) is either a retired or active member of the armed forces, including the Illinois National Guard, or an authorized provider or registered member of an authorized provider. An employee taking leave under this act is entitled to pay at his or her regular rate of pay and may take this leave in lieu of using paid leave, including vacation or personal leave.
House Bill (HB) 2978 (Public Act 104-0259), or the “Family Neonatal Intensive Care Leave Act,” establishes a requirement for employers to provide unpaid leave while an employee’s child is in the neonatal intensive care unit (NICU). An employer with sixteen to fifty employees must provide ten days of leave, while an employer with more than fifty employees must provide up to twenty days of leave. (This law will become effective on June 1, 2026),
Expansion of Current Illinois Employment Laws
HB 3638 (Public Act 104-0320) amends the Illinois Workplace Transparency Act. Workplace Transparency Act to expand protections for employees regarding confidentiality agreements and no-rehire provisions.
While the law previously stated that no contract or agreement could restrict an employee from reporting unlawful employment practices, it has now been expanded to prohibit contracts or agreements restricting employees from “engaging in concerted activity to address work-related issues.” The definition of “unlawful employment practice” was also amended from “unlawful discrimination, harassment, or retaliation” actionable under certain laws, to “any practice made unlawful” by the Illinois Human Rights Act, Title VII of the Civil Rights Act of 1964, and other state and federal laws governing employment.
Additionally, employment agreements that purport to shorten any applicable statute of limitation, apply non-Illinois law to an Illinois employee’s claim, or require adjudication of an employee’s claim in a venue outside of Illinois are now against public policy, void, and severable from an otherwise enforceable contract. The amendments also clarify that as part of a separation or settlement agreement, any valid, bargained-for consideration in exchange for confidentiality related to unlawful employment practices must be separate from any consideration provided in exchange for a release of claims. And, while confidentiality related to unlawful employment practices must be “the documented preference of the employee” in order to be included as part of a separation or settlement agreement, employers are now prohibited from unilaterally including any clause in the agreement that states the promises of confidentiality are the preference of the employee.
SB 1976 (Public Act 104-0161), or the “Workers’ Rights and Worker Safety Act,” states that if, after April 28, 2025, a federal Occupational Safety and Health Act standard is revoked, repealed, or amended to become less effective in providing “safe and healthful employment and places of employment,” the Illinois Department of Labor “shall, as soon as practical … adopt a standard that incorporates the federal occupational health or safety standard as it existed prior to being repealed, revoked, amended, or newly interpreted.”
HB 1278 (Public Act 104-0171) amends the Illinois Victims’ Economic Security and Safety Act to state that an employer cannot discharge, refuse to hire, discriminate against, or retaliate against an employee because the employee used employer-issued equipment to record a crime of violence, including domestic violence and sexual violence, committed against the employee or their family or household member. Employers are also prohibited from depriving an employee of employer-issued equipment because the employee used the device to record or attempt to record such violence, and employers are required to provide an employee access to any photographs or recordings related to a crime of violence stored on an employer-issued device.
SB 2164 (Public Act 104-0135) amends the Illinois Wage Payment & Collection Act. The law streamlines the process for recovering back wages: a final administrative decision by the Illinois Department of Labor becomes a debt owed to the State, enabling collection rights. Employers need to be aware that wage decisions may now more directly lead to state collection, which increases risk.
HB2755 (Public Act 104-0006 eliminates the 200-transaction economic nexus threshold for remote sellers. After that date, remote sellers must collect Illinois sales tax only if they exceed $100,000 in gross sales into Illinois annually. This simplifies nexus rules for remote sellers, but businesses need to monitor whether they cross the $100K threshold. There are amnesty programs in 2025–2026 to help sellers settle past liability without penalties or interest
SB 2487 (Public Act 104-0425) amends the Illinois Human Rights Act to make fact-finding conferences discretionary instead of mandatory for charges of discrimination filed on or before the effective date of the amendatory act.
HB 3094 (Public Act 104-0272)
Expands eligibility of pre-tax commuter benefits to part-time employees, but excludes construction workers covered by a union. Applies to “covered employers” (50+ employees at addresses within 1 mile of fixed-route transit). Businesses will need to re-evaluate who qualifies under their commuter benefits plans.
New Child Care Requirements:
HB 3439 (Public Act 104-0307) amends the Child Care Act of 1969 to require that an employee or volunteer of a day care center, day care home, or group day care home undergo a criminal background investigation every five years. This amendment establishes a secure background check program administered by the Illinois Department of Early Childhood in which day care centers, day care homes, and group day care homes may hire an employee or volunteer on a probationary basis after receiving a qualifying result as determined by the Department of Early Childhood.
Food Service Sanitation Training
SB 1288 (Public Act 104-0090) Requires food service sanitation managers to include training on celiac disease and safe handling of gluten-free foods. For restaurant businesses, this means updating sanitation training programs and possibly retraining staff.
Human Trafficking Recognition Training
SB 1422 (Public Act 104-0099) Expands the Human Trafficking Recognition Training Act to cover restaurant and truck stop employers. Employers in those sectors will need to ensure they are providing legally required training.
Warehouse Tornado Preparedness Act:
HB2987 (Public Act 104-0262) Requires warehouse operators to develop tornado safety plans and maintain emergency supplies.
Key Action Items for Businesses
- HR / Compliance: Review and update policies, especially around AI, leave, confidentiality, and employee agreements.
- Payroll / Benefits: Prepare to adjust payroll for paid leave and breaks
- Training: Update training programs for food service and trafficking recognition.
- Tax / Finance: Monitor remote sales to ensure compliance with the new $100K nexus threshold.
- Contracts: For companies using voice / likeness in media, revising contracts to include specific language about digital replica usage.