Is Your Organization Ready for Colorado’s New AI Workplace Requirements?

HR / Workplace

By: Kim Adamson

 

Artificial intelligence is rapidly transforming the workplace. From applicant screening and talent acquisition to workforce planning and performance management, employers are increasingly relying on technology to improve efficiency and support decision-making.

Colorado continues to be a leader in workplace regulation and emerging technology governance. Earlier this year, Colorado replaced its original AI law with a revised framework under SB 26-189. The updated law significantly reduces compliance burdens while focusing on practical safeguards that promote transparency and accountability when employers use AI to materially influence employment-related decisions, including hiring, compensation, promotion, and other employment opportunities.

The new law focuses on three primary employer obligations when using automated decision-making technologies in certain employment decisions:  

  • Providing notice when covered automated decision-making technology is used.
  • Establishing procedures related to adverse employment actions.
  • Maintaining appropriate records related to covered systems and decisions.

Although the law does not take effect until January 1, 2027, Colorado employers should begin preparing for the new legal requirements by evaluating how AI is currently used throughout their organizations. Many AI-powered features are already embedded in applicant tracking systems, resume screening software, interview scheduling platforms, employee performance tools, workforce analytics applications, and learning and development systems. Understanding where and how these technologies are being used is the first step toward compliance.

As part of a 2027 readiness strategy, Colorado employers should consider the following steps:

  • Identify all AI and automated decision-making tools. Don’t assume AI exists only in recruiting software, since many HR, payroll, and talent management platforms, including hiring, compensation, promotions, discipline, terminations, scheduling, and workforce analytics platforms, now incorporate AI-driven features by default.
  • Determine whether AI influences any consequential employment decisions, and document processes and procedures that require human oversight before making final employment decisions.
  • Develop processes to provide required notifications when applicants or employees need to be informed regarding the use of covered automated decision-making technology.
  • Create an adverse action review process for employees and applicnts affected by certain AI-assisted decisions, as they may have rights related to review and correction processes.
  • Evaluate vendors regarding their compliance capabilities, transparency features, data retention practices, and bias-mitigation efforts.
  • Update policies and training for HR teams and managers regarding responsible AI use, documentation requirements, and legal obligations.
  • Establish policies for record retention of appropriate documents and information in compliance with the new law.

A key theme SHRM emphasizes is that AI should support, not replace, human judgment and promote an “AI + Human Intelligence = ROI” philosophy that encourages organizations to combine technology-driven efficiencies with meaningful human oversight while ensuring people remain accountable for workplace decisions.

While many details will continue to evolve through guidance and rulemaking, employers that begin conducting an inventory of current systems and assessing their AI practices now will be in a stronger position to comply with the requirements of Colorado’s new AI law by the January 1, 2027 deadline.  Employers with policies, procedures, and training in place help build employee trust regarding their responsible use of workplace technology.

 

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