Colorado employers using artificial intelligence in employment decision-making need to prepare for new compliance obligations. On May 14, 2026, Colorado enacted the new law - SB 26-189 - substantially revising the state’s prior artificial intelligence law and establishing new requirements for organizations that use ‘automated decision-making technology’ (“ADMT”) in ‘consequential decisions’ including employment.

The law takes effect January 1, 2027.

While Colorado’s earlier AI framework broadly regulated “high-risk” artificial intelligence systems, the new law narrows the focus and instead emphasizes transparency, notice, and procedural safeguards when automated technologies materially influence decisions affecting individuals including applicants and employees.

For employers, this will mean significant administrative and substantive process changes and increased scrutiny of AI-assisted tools used in recruiting, hiring, promotion, compensation, discipline, performance management, and workforce planning.

What is Covered?

The law applies to automated decision-making technology, broadly defined as systems that process personal data and generate outputs - such as rankings, scores, recommendations, classifications, or predictions - that are used to make, assist, or substantially guide a consequential decision. Employment decisions are expressly included within the definition of a “consequential decision.”

Importantly, coverage turns on whether the technology materially influences an employment decision, rather than merely performing administrative or clerical functions.

Key Employer Obligations

We expect the Colorado Attorney General to issue rules clarifying and providing more details about these new obligations.

Based on the law’s language, here is what’s required as of January 1, 2027:

• Point of Interaction Notice – Employers must provide notice when a covered ADMT is used in connection with a consequential decision affecting applicants and/or employees.
• Adverse Decision Disclosures – If an AI-influenced employment decision results in an adverse outcome (for example, a rejected application or denied promotion), the employer must provide a plain-language description of the technology’s role in the decision within 30 days.
• Human Review & Reconsideration – Applicants and/or employees will have the right to request meaningful human review and reconsideration of an adverse decision involving a covered ADMT. Notably, the law provides a possible carve-out to this resource-intensive requirement for employers. Specifically, human review may not be required when doing so is not commercially reasonable. We anticipate further clarification from the Attorney General on this issue.

What Should Employers Do Now?

1. Inventory AI-enabled HR tools used in recruiting, hiring, promotion, compensation, performance management, and other employment decisions.
2. Assess and document whether automated outputs materially influence decisions.
3. Manage your vendors. Employers relying on third-party HR technology vendors should initiate requests for increased transparency on system development, system functionality, intended use cases, known limitations, and oversight recommendations. Review and revise vendor agreements to address compliance responsibilities and allocation of risk.
4. Develop notices and adverse decision procedures.
5. Evaluate whether a human review process is commercially reasonable for each use case.
6. Be prepared to explain how decisions are made and why the decisions are legally defensible.

The new law does not create a private right of action; instead, violations will be enforced by the Colorado Attorney General under the Colorado Consumer Protection Act.

Because many employers already use technology that may fall within the law’s broad definition of ADMT - often through third-party recruiter or talent management platforms - now is the time to assess whether existing HR practices trigger Colorado’s new requirements. Employers should also expect increased scrutiny of AI-assisted employment practices under existing anti-discrimination laws.

We will continue to monitor guidance from the Colorado Attorney General and stand ready to assist employers as they evaluate AI-related employment practices and prepare for compliance.

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If you have any questions regarding these changes to Colorado's AI law or require assistance in ensuring your company's compliance, please contact the Silberman Law legal professional with whom you work, or simply reply to this Alert.