Colorado Revamps AI Law Impacting Employer Use of Automated Decision-Making
Colorado replaced its 2024 AI law with a new statute regulating automated decision-making in hiring and more.
Why it matters: Employers and legal teams must adapt to the revised AI law's compliance demands to avoid regulatory pitfalls. The changes streamline obligations but maintain key protections around AI-driven decisions affecting consumers and employees.
- Colorado Governor Jared Polis signed SB 26-189 on May 14, 2026, repealing the 2024 Colorado Artificial Intelligence Act.
- The new law, effective January 1, 2027, targets automated decision-making technology (ADMT) used in consequential decisions impacting consumers, including employment.
- Employers must now provide advance notice of ADMT use, explain adverse decisions, offer human reviews on request, correct inaccuracies, and keep records for three years.
- The law removes the explicit duty to prevent algorithmic discrimination but requires compliance with existing state anti-discrimination laws.
- Sen. Robert Rodriguez said the bill balances consumer protection with manageable obligations for AI developers and users.
On May 14, 2026, Colorado Governor Jared Polis signed into law Senate Bill 26-189, repealing and replacing the 2024 Colorado Artificial Intelligence Act. The updated statute takes effect January 1, 2027, and focuses specifically on automated decision-making technology (ADMT) that materially influences consequential decisions affecting consumers.[Mayer Brown] This includes decisions within employment contexts, such as hiring and promotions.[Littler]
Under the new framework, employers must provide clear notice before using ADMT in consequential decisions, offer explanations if these technologies lead to adverse outcomes, and comply with requests for human review of the decision-making process. Additionally, employers are required to correct any inaccuracies found in the data used and retain relevant records for a period of three years.[CWC]
Significantly, the law eliminates the prior affirmative duty on businesses to prevent algorithmic discrimination. Instead, it reaffirms that existing Colorado anti-discrimination statutes apply to any use of automated decision-making technology.[DLA Piper] This shift was described by Senator Robert Rodriguez, the bill’s main sponsor, as a way to protect consumers while avoiding overly burdensome measures on AI developers and employers.[Mayer Brown]
Employers and legal professionals must review and update their compliance programs to align with these new requirements, particularly in notification procedures, recordkeeping, and human review mechanisms. While less prescriptive than the previous law, the new statute still imposes meaningful transparency and accountability obligations where AI technologies impact significant decisions.
By the numbers:
- May 14, 2026 — Date SB 26-189 was signed into law
- January 1, 2027 — New law's effective date
- 3 years — Minimum record retention period required of employers
Yes, but: While the new law reduces some compliance burdens, it leaves details on implementing notices and human reviews undefined, creating uncertainty for employers.
What's next: Employers should prepare for the January 1, 2027 effective date by auditing their AI decision-making tools and updating policies accordingly.