Colorado has amended a law regulating artificial intelligence (AI) use, lowering the burdens on employers [S.B. 189, L. 2026]. The effective date of the law has been delayed further until January 1, 2027, from June 2026 (it was originally scheduled to take effect in February 2026).
Effective January 1, 2027, Colorado will require employers to comply with notice and recordkeeping requirements when using AI. The law covers AI operations that process and use personal data to make recommendations, classifications, or assist in decisions. It does not cover AI tools used by an individual to summarize, organize, or present information if the information is for human review.
Prior to using AI for certain decisions, employers will be required to provide notice to affected employees or applicants. The notice must describe the use of AI and how the individual may access additional information.
If the use of AI results in an adverse outcome for an employee or applicant, the employer will have to provide additional notice within 30 days of the decision. The notice must describe the decision, the role AI played, and instructions for how the individual can request any personal data used to correct factual errors.
Employers using AI will be required to retain records demonstrating compliance with the notice requirements for 3 years.
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Lorelei Abernathy, Esq., is Editor of PayState Update and Editor of Payroll Information Resources for PayrollOrg.