Colorado
Colorado: Amendments to Artificial Intelligence Law
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APPLIES TO All Employers with Employees in CO |
EFFECTIVE JAN 1, 2027 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion
Colorado’s governor signed SB 26-189, amending the state’s artificial intelligence law and substantially reducing the compliance burden on employers. The amendment was passed just one day before the end of the 2026 legislative session and signed just before the previously enacted law was set to take effect on June 30, 2026. The law is now set to take effect on January 1, 2027.
Notably, the amendment eliminates a number of the more burdensome requirements from the prior version of the law, including obligations to conduct impact assessments, implement a formal risk management program, conduct annual reviews of AI tools, report discriminatory outcomes to the attorney general, and affirmatively avoid algorithmic discrimination. Instead, the amended law relies on existing state and federal anti-discrimination laws to address discriminatory outcomes. Key aspects of the amended law are summarized below.
Coverage. Under the amendments, the law applies to employers that do business in Colorado and use “automated decision-making technology” (ADMT) to “materially influence” a “consequential decision” involving employment, including decisions about access to, eligibility for, selection for, or compensation for employment. Importantly, the law is not limited to artificial intelligence in the traditional sense; it covers any technology that processes personal data and uses computation to generate an output that influences a covered decision. However, the law carves out a broad range of common workplace tools, including calculators, spreadsheets requiring human analysis, transcription and note-taking tools, and general-purpose tools like ChatGPT when not specifically intended for use in employment decisions and subject to a written acceptable use policy prohibiting such use. The law also excludes routine and low-stakes decisions such as scheduling, administrative routing, and workflow management, as well as decisions about independent contractors and applicants or employees who are not Colorado residents.
Pre-Use Notice. Before using covered ADMTs, employers must provide a clear and conspicuous notice informing individuals that automated decision-making technology will be used to materially influence a consequential decision, along with information on how to obtain additional details. This may include, for example, a notice provided as part of an online job application process for hiring decisions, or a notice provided closer in time to the employment-related decision, such as performance evaluations.
Adverse Action Process. Within 30 days of making an adverse employment decision that was materially influenced by covered ADMT, the employer must notify the affected individual with a plain language explanation of the decision and the role the technology played, instructions for requesting additional information about the technology and the data used, and an explanation of the individual’s right to correct inaccurate data and request meaningful human review and reconsideration of the decision. The human review requirement is limited by a “commercially reasonable” standard, meaning employers are only required to provide this opportunity to the extent it is commercially practicable to do so.
Recordkeeping. Employers must retain records reasonably necessary to demonstrate compliance with the law for at least three years following a covered decision. Relevant records would include the version of the pre-use notice provided, documentation of how and when notice was delivered, the adverse action notice, and records of the decision-making process.
Liability and Indemnification. The amended law splits liability for potential discrimination claims between technology developers and the employers that deploy their tools. Liability is allocated based on fault, meaning if an employer uses a technology as the developer intended and discrimination results, the developer bears liability. Alternatively, if the employer uses the technology in an unintended manner, the employer bears liability. The law also voids contractual indemnification clauses that attempt to shift a party’s liability for its own discriminatory acts onto the other party, meaning employers cannot contractually offload their own liability to a vendor, and vice versa.
Enforcement. The law will be enforced exclusively by the Colorado attorney general. There is no private right of action. Violations constitute unfair and deceptive trade practices and may result in civil penalties of up to $20,000 per violation. Before initiating an enforcement action, the attorney general must provide a 60-day notice and opportunity to cure, where a cure is deemed possible. The attorney general is also required to issue implementing regulations by January 1, 2027, so the compliance framework may develop further before the law takes effect.
Action Items
- Evaluate whether use of ADMTs triggers coverage under the amended law.
- Prepare for pre-use and adverse action notice obligations, as applicable.
- Update record retention practices, as applicable.
- Review contracts with AI tool vendors with legal counsel.
- Monitor regulatory developments from Colorado’s attorney general.
- Have appropriate personnel trained on the requirements.
Colorado: New PPE and Employee Restroom Access Requirements
On June 4, 2026, Colorado’s governor signed SB 26-160, the Personal Protective Equipment and Meatpackers Act, which went into effect immediately on signing. The law prohibits all employers from deducting the cost of personal protective equipment from employee wages or compensation. Additionally, employers with 500 or more employees engaged in the slaughter of livestock or the rendering or packaging of meat are required to provide employees with reasonable access to restrooms during work hours. The Colorado Division of Labor Standards and Statistics may fine employers that fail to comply with the restroom access requirement.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase