2026 Colorado Legislative Update for Construction Companies and Employers

Colorado’s 2026 legislative session was an active one with bills impacting construction companies as contracting businesses and as employers. Legislation spanned contracts, claims, contractor liability, labor relations, safety and working conditions, AI, reporting, dispute resolution terms, workplace rights, and benefit costs. Here’s a summary of what passed and what failed:

What Passed

Several construction-focused bills passed or became law. Unless otherwise noted, the new laws will take effect August 12, 2026, if not vetoed:

• The General Assembly enacted SB 26-074 – Clarify Excessive Public Construction Bond Claim Penalty to address the Wadsworth Court of Appeals decision while it was still pending. (Note: The Colorado Supreme Court recently issued its opinion in alignment with SB 26-074. See our earlier coverage of the case here.) The new law clarifies that, on public construction projects, a contractor who knowingly files a verified statement of claim for an excessive amount forfeits rights only as to the verified statement of claim, while also expressly allowing certain contract-based costs, including delay and lost productivity costs, to be included even if they are disputed. The law also clarifies that recovering less than the amount claimed does not automatically make the claim excessive if the claimant had a “good faith basis” to believe the owner or contractor owed the amount at the time of filing.

• HB 26-1311 – Retainage Surety Bond Construction Contracts authorizes contractors to submit a surety bond in lieu of retained funds on qualifying construction contracts, and it requires owners to accept the bond if statutory standards are met. Subcontractors may also require similar treatment downstream. This legislation was largely supported by Colorado’s construction industry.

• SB 26-001 – Workforce Housing & Housing Tax Credit significantlyexpands local government tools to support affordable and workforce housing, including broader authority to use public property and certain tax revenues for housing-related purposes. For construction stakeholders, the bill is especially notable because it clarifies that county workforce housing projects qualify as “governmental capacity” for the sales-and-use-tax exemption on construction materials used by contractors. It also expands access to the middle-income housing tax credit in transferred credit transactions.

• SB 26-109 – Building Code Accessibility (eff. May 5, 2026) updates accessible housing requirements and requires covered developers to plan for how required accessible units will be delivered. Industry groups and regulators generally supported the legislation.

Labor-related bills that passed include:

• SB 26-093 – Workers’ Compensation Insurance Coverage Verification was signed by the Governor on May 29, 2026. The law requires an applicant for a building permit or construction permit for a project with a total construction cost of more than $1 million to file, before work begins, a signed declaration verifying that persons working under the permit maintain workers’ compensation coverage. It also authorizes complaints to the Division of Workers’ Compensation for alleged violations.

• On the AI front, SB 26-189 – Automated Decision-Making Technology repealed Colorado’s 2024 AI framework, replacing it with a narrower automated decision-making technology regime covering consequential decisions, including employment decisions. It requires developer documentation, retention of compliance records, notices to consumers, access and correction rights, and human review/reconsideration after adverse consequential decisions, with a start date of January 1, 2027. Employers using AI-assisted hiring or other automated employment tools should pay attention to this one. For a more in-depth analysis of the new law, see our prior article here.

• HB 26-1207 – Disclosure of Demographic Workforce Data passed the General Assembly and has been sent to the Governor for signature. If it becomes law, beginning July 1, 2027, it requires private employers with 100 or more workers doing business in Colorado to submit EEO-1 demographic workforce data to the Colorado Secretary of State. The requirement applies even if the federal government later stops requiring EEO-1 reporting.

• HB 26-1272 – Extreme Temperatures Worker Protections passed the General Assembly and was sent to the Governor on June 3, 2026. As passed, the bill directs the CDLE to collect data on temperature-related injuries, illnesses, and emergencies and to develop a model temperature-related injury and illness prevention plan. Construction employers with outdoor workforces should continue monitoring this bill in the event it becomes law.

What Failed

Various bills specific to construction companies failed:

• HB 26-1236 – Arbitration Reform would have reshaped arbitration practice between employers and employees and businesses and consumers, including fee shifting, representative action waivers, and additional damages for failure to comply with arbitration awards. The bill sought to allow claimants to recover exemplary damages in arbitration proceedings, repealing current law. The Governor vetoed the bill on June 2, 2026.

• HB 26-1245 – Theft by Contractor would have treated misuse of a construction advance payment as theft in specified circumstances and required disclosures before taking advance payments.

• HB 26-1334 – Modify Standards of Wildfire Resiliency Code Board would have delayed the deadline for certain local governments to adopt wildfire resiliency code standards and created a petition process for modifications.

• HB 26-1415 – Optional Residential Construction Contractor Certification, sought to create an optional residential construction contractor certification program in the Department of Law, with annual contractor fees of up to $100 funding the program and intended to reduce homeowner harm from abandoned or poorly performed residential projects.

Several employment-related measures also failed this session:

• SB 26-127 – Family Medical Leave Insurance Duration Extensions would have expanded FAMLI duration extensions by defining NICU leave more specifically and allowing up to two additional weeks of leave after the death of a family member for whom the employee was providing care while on leave.

• A broader labor bill, HB 26-1005 – Worker Protection Collective Bargaining sought to amend Colorado’s Labor Peace Act by expanding collective bargaining rights on mandatory subjects, eliminating the second election currently required for a union security clause, and requiring employers and unions to bargain in good faith. The Governor vetoed the bill after the legislative session.

• HB 26-1054 – Protections for Worker Safety sought to create a broad Colorado workplace safety framework, including a general duty to provide reasonably safe workplaces, compliance obligations tied to rules adopted by the CDLE, and civil enforcement that could be pursued not only by regulators, but also by labor organizations and aggrieved persons. Because construction employers already operate in a heavily regulated safety environment, this bill would have significantly increased exposure and cost of doing business if it had passed.

• HB 26-1210 – Prohibit Surveillance Price & Wage Setting would have prohibited the use of certain individualized price or wage setting algorithms that rely on surveillance data to determine the amount charged to a consumer or the wage offered to a worker, while also requiring reasonable procedures to ensure data accuracy and permit worker access to, and correction of, data the employer uses to set wages. Violations would constitute a deceptive trade practice under the Colorado Consumer Protection Act, which imposes significant penalties. The bill was vetoed and did not become law.

• HB 26-1319 – Right to Be Out at Work would have created new workplace rights relating to LGBTQ+ identity and expression, including limits on adverse action, restroom access, record updates, benefit access, and related obligations for employers.

• HB 26-1327 – Large Employer Worker Health-Care Support would have created a large employer health-care support enterprise and imposed a fee on certain employers with 500 or more supported workers receiving medical assistance benefits. The bill would have been significant for larger employers and labor-intensive businesses.

Proposed Rules and Regulations to Implement Denver’s “Waste No More” Ordinance

The City and County of Denver recently issued draft Rules and Regulations Governing Recycling and Reuse of Construction and Demolition Materials. If adopted, significant changes for contractors and property owners will begin September 1, 2026. The ordinance applies broadly to multifamily properties, certain food businesses, permitted events, and non-residential buildings, and it also imposes specific requirements on construction and demolition (C&D) projects.

Based on draft materials and stakeholder sessions, the rules are expected to formalize waste diversion plan requirements, documentation standards, and enforcement mechanisms tied to the existing ordinance thresholds – namely, projects over 500 square feet for new construction/demolition and 2,500 square feet for interior remodels that require permits. The draft framework reinforces that covered projects must meet minimum diversion rates (50% by weight through 2035, increasing to 65% thereafter) and identify specific recyclable material streams (such as concrete, wood, and metal) at the planning stage.

The draft framework also introduces a more defined compliance and verification process, including documentation such as haul tickets and reconciliation of actual diversion at project closeout. The ordinance’s performance security deposit remains a key enforcement mechanism, with the draft rules expected to clarify when deposits are returned or forfeited. Denver has indicated that it is pausing some documentation requirements while it develops final rules and systems, signaling a transition period before full enforcement.

For construction businesses, the impact is practical and immediate: projects will require earlier planning, tighter coordination with subcontractors and haulers, and more rigorous recordkeeping. The rules also introduce financial exposure tied to compliance, making waste diversion a front-end project consideration rather than a back-end requirement. Businesses should take steps now to understand these requirements and ensure compliance well in advance of the September 1, 2026 effective date.

Takeaways

Employers and construction industry stakeholders should evaluate how these newly enacted, pending, and vetoed measures could affect their operations, workforce practices, contracts, compliance obligations, and long-term planning. Because the impact of these local and statewide actions will vary based on your company’s size, industry role, and employment structure, we encourage you to review these developments in light of your specific business needs.

Please reach out to our team with any questions about how these measures may apply to your organization or if you would like help assessing and strategizing next steps.

Lindsay Rose is a Colorado Springs–based business attorney who focuses her practice on employment law and contract law primarily in the construction industry. With a background spanning litigation, trial work, corporate counsel, and public sector service, Lindsay delivers practical, solutions-driven guidance to help employers and businesses minimize legal risk while maximizing operational and financial success. She can be reached at lrose@fennemorelaw.com.