On February 1, 2026, the Colorado Artificial Intelligence Act, SB 24-205, went into effect, requiring businesses in Colorado using “high-risk artificial intelligence systems” (“HRAIS”) to make “consequential decisions” to protect Colorado residents from “algorithmic discrimination.”
This may apply to your business if it relies on an AI system to make certain types of decisions (or is a substantial factor in making those decisions), such as employment decisions (e.g., hiring).
The law provides the following key definitions:
An artificial intelligence system (“AIS”) is any machine-based system that makes inferences based on inputted information that can influence physical or virtual environments.
An HRAIS is any AIS that, when deployed, makes, or is a substantial factor in making, a consequential decision.
A consequential decision is a decision that has a material legal or similarly significant effect on the provision or denial to any Colorado resident (“consumer”) of, or the cost or terms of: education enrollment or an education opportunity; employment or an employment opportunity; a financial or lending service; an essential government service; health-care services; housing; insurance; or a legal service.
Algorithmic discrimination is any condition in which the use of AI results in an unlawful differential treatment or impact that disfavors an individual or group of individuals on the basis of their actual or perceived age, color, disability, ethnicity, genetic information, limited proficiency in English, national origin, race, religion, reproductive health, sex, veteran status, or other state or federally-recognized classification.
A Business Using an HRAIS Must Use Reasonable Care to Protect Consumers from Algorithmic Discrimination
Under this law, a business using an HRAIS must use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination.
Under this law, a business using an HRAIS must use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination.
A business using an HRAIS must complete an impact assessment for the HRAIS on or after February 1, 2026, and must complete an impact assessment at least annually and within 90 days after any intentional and substantial modification to the HRAIS is made available. The statute details the requirements of the impact assessment.
Of particular importance, on and after February 1, 2026, a business relying on an HRAIS to make a consequential decision must provide specific information to the consumer who may be affected by the decision and when the consequential decision has adversely affected the consumer.
On and after February 1, 2026, a business using one or more HRAISs must clarify on their website:
The types of HRAISs currently in use
How the business manages known or reasonably foreseeable risks of algorithmic discrimination that may arise from the deployment of each HRAIS system; and
In detail, the nature, source, and extent of the information collected and used by the business.
This law is enforced by the Colorado Attorney General. Violation of the law constitutes an unfair trade practice. In enforcement actions, the business would bear the burden of demonstrating compliance with the act.
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