AI Law Update for Colorado Employers

Colorado’s artificial intelligence law remains an important development for employers that use or plan to use AI or other automated tools in recruiting, hiring, promotion, discipline, termination, or other employment-related decision-making. For construction employers, this may include vendor software that screens resumes, ranks applicants, scores interviews, or helps evaluate employees. Enforcement of the law, which is currently set to go into effect on June 30, 2026, was recently stayed by a federal district court ruling, leaving more uncertainty going forward.   
 
As currently enacted, SB 24-205 (Consumer Protections for Artificial Intelligence) applies to certain developers and deployers of high-risk artificial intelligence systems, such as AI vendors and business that use covered AI tools, used to make, or be a substantial factor in making, a consequential decision about a Colorado resident, including decisions involving employment or employment opportunities. In general, the law requires covered entities to use reasonable care to protect consumers from known or reasonably foreseeable risks of algorithmic discrimination, meaning unlawful bias or discriminatory impact resulting from use of the AI system. For covered deployers, including employers using covered AI tools, that includes obligations tied to risk management, impact assessments, notices, opportunities to correct inaccurate personal data, and an appeal process with human review when technically feasible. Enforcement is vested in the Colorado Attorney General, and the law does not create a private right of action for statutory violations, although existing employment-discrimination and other legal claims remain available.   
 
The law is likely to change before it is implemented. A pending bill, SB 26-189 (Automated Decision-Making Technology), would repeal and reenact the current framework with a narrower approach focused on certain “automated decision-making technology” used in consequential decisions. As proposed, the bill would replace the broader “high-risk AI system” model by replacing the current statutory “reasonable care” duty and algorithmic discrimination (i.e., unlawful bias or discriminatory impact) framework with a disclosure- and review-based model for covered automated decision-making technology in consequential decisions. In plain terms, SB 26-189 would shift the focus from “high-risk AI systems” to certain tools that process personal data and generate scores, rankings, recommendations, classifications, or similar outputs used to help make important decisions. The bill text also reflects a new proposed effective date of January 1, 2027.   
 
There is also an important federal court development affecting enforcement timing. On April 27, 2026, the U.S. District Court for the District of Colorado granted the parties’ joint motion to stay the case and temporarily stay enforcement. Under the federal district court order mentioned earlier, the Colorado Attorney General may not initiate enforcement actions or investigations for alleged violations of SB 24-205, or any legislation replacing or amending it during the current legislative session such as SB 26-189 until after the court rules on a forthcoming motion for preliminary injunction. Importantly, this is a temporary procedural stay, not a final ruling on the merits of the statute.   
 
The Colorado Attorney General’s office has also stated that formal notice-and-comment rulemaking has not yet begun, which adds another layer of uncertainty and potential for delay as employers continue to evaluate compliance planning.   That matters because employers still do not have final rules explaining what compliance will look like. 
 
For now, employers should continue monitoring developments, especially if they use AI or automated tools in employment decisions. Employers may also want to inventory those tools now—particularly vendor platforms used for recruiting, screening, hiring, promotion, discipline, or termination—so they can respond quickly once the law, any amendments, implementing rules, and enforcement timing are clearer.  
 
We will continue to monitor developments and share further updates as they occur. In the meantime, if you have questions about how this law may affect your hiring or employment practices, please contact us. 

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.

Trystan Melancon is an attorney with Fennemore whose practice focuses on construction law, business transactions, and litigation in Colorado. She advises contractors, developers, and subcontractors on contract drafting and negotiation, regulatory compliance, entity formation, and day-to-day business operations. Trystan also represents clients in construction defect disputes, mechanic’s lien claims, collections, and related litigation. She can be reached at tmelancon@fennemorelaw.com.