Recent legislative developments in multiple states have targeted employers’ use of artificial intelligence (“AI”) in employment decisions, reflecting a growing trend toward workplace AI regulation. As AI tools become increasingly common in hiring, discipline, and termination decisions, state legislatures have begun establishing guardrails through new AI employment laws and other state laws for employers. These laws generally focus on transparency, notice, human oversight, and protections against potentially biased or automated decision-making. The following laws from California, Colorado, and Connecticut highlight the varying approaches states have taken to regulating employers’ use of AI in employment decisions.

State AI

California

Effective July 1, 2027, California Senate Bill 947 (SB 947), deemed the “No Robo Bosses Act,” prohibits employers from, amongst other things, relying solely on automated decision systems (“ADS”) to discipline or terminate workers. The definition of ADS is broad and covers “any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decision-making and materially impacts natural persons.”

Key provisions affecting California employers include the following:

• An employer cannot rely solely on an ADS when making a disciplinary or termination decision. If the employer primarily relies on the ADS to make the disciplinary or termination decision, the employer must direct a human to corroborate the decision using the data collected or used for the ADS output or other relevant information, including evaluations, personnel files, work product, peer reviews, and witness interviews.
  • If the ADS output cannot be corroborated, the ADS output cannot be used to make a disciplinary or termination decision. 
• An employer primarily relying on an ADS to make a disciplinary or termination decision must provide the affected employee with a written post-use notice at the time of informing the employee of the decision. 
  • The notice must be written in plain language as a separate stand-alone communication; must be in the language routinely used to communicate with other employees; and must be provided in a simple, easy-to-use method like e-mail, hyperlink, or other written format.
  • The notice must include: (1) that the employer primarily relied upon an ADS to make the decision; (2) that a human reviewed the decision and corroborated the ADS output; (3) contact information for a human the employee can contact for information about the decision and the employee’s access rights as described below; and (4) that the employer is prohibited from retaliating against the employee for exercising the aforementioned rights.
• Employees have the right to request a description of the employee’s data used by the ADS when the ADS is primarily used to make a disciplinary or termination decision. 
• If the employer violates the law, the Labor Commissioner may enforce the law and issue a citation, including civil penalties of $500 per violation.

Colorado

Effective January 1, 2027, Colorado Senate Bill 26-189 (SB 26-189) replaces the 2024 Colorado AI Act with a framework revolving around automated decision-making technology (“ADMT”), which is defined as “a technology that processes personal data and uses computation to generate output, including predictions, recommendations, classifications, rankings, scores, or other information that is used to make, guide, or assist a decision, judgment, or determination concerning an individual.” SB 26-189 covers many areas, including education enrollment, employment, real estate purchases, insurance, and healthcare services.

Key provisions affecting Colorado employers include the following:

• Prior to using an ADMT to influence a “consequential decision”—a decision made about an employee or applicant relating to the employee’s eligibility for, selection for, or compensation of employment—the employer must provide a clear and conspicuous notice to the employee or applicant that the employer used or will use an ADMT in a consequential decision. The notice can be a public notice, including a link or posting. 
• If using an ADMT to materially influence a consequential decision resulting in an adverse outcome for the employee or applicant, the employer must provide the following within 30 days after making the decision:
  • Plain language description of the decision and the role the ADMT played.
  • Instructions and a simple process to request additional information about the ADMT, including the name of the ADMT, the ADMT version number, the ADMT developer, and the types, categories, and sources of personal data used. 
  • An explanation of the employee or applicant’s rights described in Section 6-1-1705 and how to exercise them. 
• The Attorney General is directed to adopt rules to clarify and implement the above post-adverse outcome disclosure requirements by January 1, 2027.
• Employees or applicants have the right to seek human review and reconsideration of the consequential decision.
• The Attorney General has sole enforcement powers, meaning there is no individual right of action.

Connecticut  

Effective on various dates, as described below, Connecticut Public Act No. 26-15 creates a comprehensive AI framework with specific provisions directed at employers. Several relate to automated employment-related decision technology (“AEDT”), which is defined as “any technology that processes personal data and uses computation to generate any output, including, but not limited to, any prediction, recommendation, classification, ranking, score or other information, that is a substantial factor used to make or materially influence an employment-related decision.”

An employment-related decision is “any decision, made based on any individual’s personal data, to hire, promote, discipline or discharge such individual, to renew such individual’s employment, to select such individual for any training or apprenticeship or with respect to such individual’s tenure or terms, privileges or conditions of employment, and (B) does not include any such decision that (i) results in any nonmaterial change in such individual’s job tasks, work responsibilities, hours or work assignments, or (ii) is made with respect to workplace health and safety, scheduling and planning or productivity monitoring[.]”

Key provisions affecting employers include the following:

• Effective October 1, 2026: Use of an AEDT is not an automatic defense against a complaint of a discriminatory practice. However, the commission or court may consider evidence of anti-bias testing or similar proactive efforts to avoid the discriminatory practice.
• Effective October 1, 2027: An employer who uses an AEDT to interact with an employee or applicant for employment must disclose such interaction to the employee or applicant. This disclosure must be in plain language. This disclosure is not needed when it is obvious the person is interacting with an AEDT.
• Effective October 1, 2027: An employer who uses an AEDT to generate output for the purpose of making, or as a substantial factor in making, an employment-related decision concerning an employee or applicant must, before the decision is made, provide the employee or applicant a written notice that discloses: (1) the AEDT is being used; (2) the purpose of the use of the AEDT and the nature of the employment-related decision; (3) the trade name of the AEDT; (4) the categories of personal data the AEDT will use and how the personal data will be assessed in reaching a decision; (5) sources of the personal data; and (6) contact information of the employer.
• Effective October 1, 2026: The Attorney General has sole enforcement powers and may provide a discretionary 60-day cure period for violations occurring on or before December 31, 2027.

The Growing Trend of State AI Laws for Employers

California, Colorado, and Connecticut are part of a broader trend of state laws for employers addressing the use of artificial intelligence in the workplace. Several other states have enacted laws or issued executive orders addressing the use of AI in employment decisions by public entities, government agencies, or state departments, including:

• Arkansas
• Kentucky
• Maryland
• New Hampshire

Unlike the laws discussed above, these measures generally apply only to governmental employers and do not impose obligations on private employers.

What Employers Should Do to Comply with Emerging AI Employment Laws

As AI is rapidly becoming part of the employment decision-making process, state legislatures are taking notice. California, Colorado, and Connecticut each have enacted laws that impose new obligations on employers using AI tools in hiring, promotion, discipline, termination, and other employment decisions. Although the specific requirements vary, these laws share common themes: transparency, notice, human oversight, and employee rights related to AI-assisted decisions. Employers should review any AI tools currently used in employment processes, consult with employment counsel to evaluate whether existing practices comply with applicable state requirements, and monitor developments in other states, as additional AI related employment laws are likely to come.

Questions About AI Compliance in the Workplace?

Ice Miller’s Labor & Employment team advises employers on workplace regulation, AI hiring laws, and other evolving employment law requirements. Get in touch with our team to learn how you can remain compliant and stay proactive ahead of emerging regulatory requirements.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.