Colorado’s Landmark AI Legislation Would Create Significant Compliance Burden for Employers Using AI Tools

Littler | By Niloy Ray, Zoe Argento, Philip Gordon, and Kellen Shearin

• Colorado Senate Bill 24-205 ("SB205") introduces statutory tort liability for AI algorithmic discrimination in employment. If enacted, the bill would require employers using “high-risk” AI tools to implement risk management policies, conduct impact assessments, and provide detailed notices by February 1, 2026. 
  
  
• Compliance with SB205 will place an onerous burden on any employer doing business in Colorado to identify “differential treatment or impact” on a broad list of protected categories. To comply with this duty, the bill requires extensive, and potentially costly, transparency, analysis, and documentation.
  
  
• If enacted, SB205 could stifle the use of AI by employers as it provides the right to appeal any adverse decision derived from the AI tool, including human review of the decision. The appeal requirement could not only minimize the speed and efficiency the AI tool is supposed to provide, but also overwhelm an employer’s entire hiring process. 

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