Colorado “Resets” Its AI Law – What Employers Need To Know

May 20, 2026

What's New

Colorado has repealed and replaced its 2024 AI law (before it went into effect) with a new 2026 AI law. Although the updated law is less onerous for employers than its predecessor, it still reshapes employers’ obligations when using AI for employment decisions.

Notably, the new law drops many core compliance requirements, including risk management programs and annual bias audits, and instead emphasizes notice, post-adverse-decision explanations, data correction rights, and meaningful human review.

The new law takes effect January 1, 2027.

What It Means

For employers, the shift is significant. The prior law required a front-loaded compliance model focused on governance, documentation, and proactive bias assessments/mitigation. The new law replaces that with a decision-by-decision accountability model by requiring employers to:

• provide notice before using covered AI;
• give a plain-language explanation of AI’s role in an adverse decision;
• conduct a human review if requested;
• correct inaccurate information; and
• retain relevant records for three years.

While the compliance burden is reduced, risk has not disappeared—it has shifted. Employers must now be prepared to explain and defend individual AI-assisted decisions, particularly those resulting in adverse outcomes.

What You Should Do

Employers should inventory where AI materially influences employment decisions, and

• implement clear notice and explanation processes;
• establish workflows for human review and data correction; and
• ensure documentation supports individual decisions.

We expect additional guidance from Colorado before the new law takes effect in January 2027. In the meantime, CWC is developing a desk guide to help members comply.

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