Overall Vote Recommendation

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

HB 5118 would require the Texas Workforce Commission, in consultation with the Department of Information Resources, to conduct a study on the use of artificial intelligence systems and automated employment decision tools in employment and hiring practices by employers, including state agencies. The bill defines an “automated employment decision tool” as a computational process or software application using algorithms, machine learning, statistical modeling, data analytics, or artificial intelligence to assess an applicant’s suitability for a position.

The study would evaluate current and future use of these systems in hiring decisions, identify methods for detecting and auditing bias, and determine minimum transparency and disclosure requirements for artificial intelligence vendors. It would also examine accountability requirements to address bias, the potential use of external independent review, existing deficiencies in oversight and regulatory protections, and the state’s ability to evaluate bias and other risks in automated hiring tools.

The Department of Information Resources would assist by examining state agency use of artificial intelligence systems and automated employment decision tools in hiring and by providing information on regulatory procedures that may help reduce bias or other risks when state agencies use those tools. The Texas Workforce Commission could consult with state agencies, private employers, and agencies with artificial intelligence security expertise, and could accept federal funds, gifts, grants, or donations to support the study.

By November 15, 2026, the commission would be required to submit a written report to state leadership and relevant legislative committees. The report would include the study results, recommendations for legislative or other action to increase transparency and decrease bias, a sector-specific risk assessment for state agency hiring processes, and a proposal for funding research on artificial intelligence bias. The Act would expire September 1, 2027.

The originally filed version of HB 5118 would have created a new Chapter 95 in the Labor Code regulating employer use of automated employment decision tools in hiring. It would have prohibited an employer from using such a tool unless an impartial, independent bias audit had been conducted at the employer’s request and the employer posted the audit results on its publicly accessible website. It also would have required the employer to notify each applicant that the tool may be used and disclose how the tool would assess the applicant’s fitness for the position, including the characteristics that may be evaluated.

The Committee Substitute for HB 5118 replaces that direct regulatory framework with a temporary study. Instead of requiring employers to conduct audits, post audit results, or provide applicant-specific disclosures, the committee substitute directs the Texas Workforce Commission, in consultation with the Department of Information Resources, to study employer and state agency use of artificial intelligence systems and automated employment decision tools in hiring. The study must evaluate current and future use of those tools, bias detection and auditing methods, vendor transparency and disclosure requirements, independent review, oversight deficiencies, and the state’s ability to evaluate bias and other risks.

The Committee Substitute also expands the focus beyond private employer compliance by expressly including state agency hiring practices and assigning the Department of Information Resources a role in examining state agency use of these systems. It requires a written report by November 15, 2026, including study results, recommendations for legislative or other action, a sector-specific risk assessment for state agency hiring processes, and a proposal to fund research on artificial intelligence bias. The substitute also includes an expiration date of September 1, 2027.

In practical terms, the filed bill would have imposed immediate operational duties on employers using automated hiring tools, while the Committee Substitute postpones direct regulation and instead creates an information-gathering process that could inform future legislation. The change matters because it reduces the bill’s immediate compliance burden on private employers, but it also preserves a policy pathway toward future regulation by directing the state to study transparency, auditability, accountability, oversight gaps, and possible funding for additional research.

Author (5)

Salman Bhojani

Claudia Ordaz

John Lujan

Caroline Harris Davila

Oscar Longoria

Contact the Author

Rep. Salman Bhojani

Capitol Phone:

(512) 463-0522

Capitol Office:

EXT E2.906

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), HB 5118 would have an estimated negative impact of $1,215,000 on General Revenue Related Funds for the biennium ending August 31, 2027. The bill would not itself make an appropriation, but the LBB states that it could provide the legal basis for an appropriation to implement the bill.

The projected cost is limited to fiscal year 2026. The LBB estimates a $1,215,000 one-time cost from the General Revenue Fund in fiscal year 2026, with no additional state fiscal impact shown for fiscal years 2027 through 2030. The cost is tied to the Texas Workforce Commission’s need to hire a contractor to conduct the required study on artificial intelligence systems and automated employment decision tools in employer and state agency hiring practices by the bill’s deadline.

The Department of Information Resources is not expected to have a significant fiscal impact from assisting with the study. The LBB also reports that the Texas Workforce Commission does not anticipate information technology expenditures, and no significant fiscal implication to units of local government is anticipated.

Vote Recommendation Notes

Texas Policy Research recommends that lawmakers vote NO on HB 5118. Although the Committee Substitute is narrower than the introduced version, it still expands the role of state government by directing the Texas Workforce Commission, in consultation with the Department of Information Resources, to study the use of artificial intelligence systems and automated employment decision tools in hiring by both state agencies and private employers. The bill is framed as a study, but its required scope goes beyond neutral information gathering and directs the agency to examine oversight deficiencies, auditability, regulatory protections, vendor disclosure requirements, accountability requirements, external independent review, and future legislative or other action.

The bill grows the size and scope of government by moving the Texas Workforce Commission into a new policy area: state evaluation of artificial intelligence tools used in employment decisions. The bill also grants the commission rulemaking authority necessary to administer the Act and implement related programs authorized under it. Even though the Act expires September 1, 2027, the required report is designed to produce recommendations for future legislative or administrative action, including a proposal to establish a method of funding research on artificial intelligence bias. That structure creates a practical pathway for continued state involvement after the study ends.

The bill increases the burden on taxpayers. The LBB estimates a negative impact of $1,215,000 to General Revenue Related Funds through the 2026–27 biennium, with the cost occurring in fiscal year 2026. The stated cost driver is the Texas Workforce Commission’s anticipated need to hire a contractor to conduct the study by the bill’s deadline. The bill does not make an appropriation, but it could provide the legal basis for one. For a bill that does not directly remedy a defined statutory failure, this represents a meaningful taxpayer cost to fund a study that may later be used to justify additional spending or regulation.

The Committee Substitute does not immediately impose new compliance duties on private employers in the way the introduced version did. The introduced bill would have required employers using automated employment decision tools to obtain independent bias audits, post audit results publicly, notify applicants, and disclose how the tool would evaluate them. The substitute removes those direct mandates and replaces them with a study. However, the substitute still reaches private employers by requiring the state to study employer use of these tools and to evaluate transparency, disclosure, independent review, accountability, and regulatory protections. That creates a foreseeable risk of future regulatory burdens on businesses, especially employers and technology vendors.

From a free-enterprise and limited-government perspective, the bill is concerning because it appears to be a precursor to regulation rather than a narrowly tailored review of state agency practices. Existing state and federal antidiscrimination laws already govern unlawful employment discrimination. Before creating a taxpayer-funded study aimed at identifying regulatory gaps and future oversight mechanisms, the legislature should require clear evidence that existing law is inadequate. The bill instead directs a state agency to search for deficiencies and propose future action, which risks turning a speculative concern into a justification for expanding government authority.

The bill expands government scope, imposes a taxpayer cost, creates rulemaking and programmatic authority, and lays the groundwork for future regulation of private-sector hiring technology. A narrower proposal limited strictly to internal state agency use of artificial intelligence in hiring, with no authority to study or recommend regulation of private employers and no new taxpayer-funded research framework, would present a materially different policy question.

Free Enterprise

The substitute avoids the introduced bill’s direct employer mandates, such as required independent bias audits, applicant disclosures, and public posting of audit results. Still, it studies private employer practices, vendor transparency requirements, external independent review, accountability standards, and regulatory protections. Those subjects are likely precursors to future compliance obligations for employers and technology vendors, creating risk of higher costs and reduced flexibility in hiring.

Property Rights

The bill does not directly affect land, physical property, takings, or asset control. The concern is more indirect: future regulation could affect proprietary hiring software, business processes, vendor tools, or employer data practices. As written, however, the bill’s direct impact on private property rights is limited.

Personal Responsibility

The bill shifts the policy conversation toward state-supervised evaluation of hiring technology rather than relying primarily on employers, applicants, existing antidiscrimination law, and market accountability. It does not create a benefit program or dependency, but it assumes government should play a larger role in identifying and correcting risks in private hiring systems.

Limited Government

This is the bill’s weakest category. The bill expands the Texas Workforce Commission’s role into artificial intelligence oversight in employment, involves the Department of Information Resources, authorizes rulemaking, allows the commission to accept outside funds, and requires a report that includes recommendations for future legislative or other action and a proposal to fund additional AI bias research. The LBB estimates a $1.215 million General Revenue cost in fiscal year 2026. For a temporary study, the bill creates meaningful taxpayer exposure and a foundation for future government expansion.

Individual Liberty

The bill does not directly restrict individual conduct or impose penalties on job applicants, employers, or workers. However, it directs the state to study bias, disclosure, accountability, and independent review in hiring tools, which could later support more state intervention in private employment decisions. The immediate liberty impact is indirect, but the bill creates a policy pathway for future rules affecting how employers evaluate applicants.

View Bill Text and Status