Introduction
In May 2024 [1], Governor Jared Polis signed into law SB24-205, a pioneering piece of legislation aimed at regulating artificial intelligence (AI) in Colorado. This law seeks to prevent discriminatory practices by employers using AI and establishes comprehensive consumer protections against algorithmic discrimination. As the first of its kind in the United States, the law mandates transparency and accountability from developers of high-risk AI systems. However, concerns about its impact on innovation and competitiveness have prompted calls for legislative review and potential amendments.
Description
Governor Jared Polis signed a law [2], SB24-205 [6], in May 2024 [1], aimed at regulating AI in Colorado and prohibiting employers from using AI in a discriminatory manner. This legislation was the first of its kind in the US to provide comprehensive consumer protections against algorithmic discrimination [7], requiring developers of high-risk AI systems to prevent discriminatory outcomes and ensure transparency through disclosures and impact assessments [7]. The law expresses concerns about its potential impact on innovation and competitiveness [1] [2] [3], prompting a call for legislative review in 2025 [1]. It seeks to establish guidelines for transparency and accountability to mitigate risks associated with algorithmic discrimination, particularly arising from biased training data in AI systems [6], such as in facial recognition. Governor Polis emphasized the need to prevent AI-driven discrimination while cautioning that the law’s broad framework could hinder technological advancement [2].
An Artificial Intelligence Impact Task Force was established to study the law and recommended legislative refinements, leading to a delay in enforcement from February 1, 2026 [1], to January 1, 2027 [1] [2] [5] [6] [7]. This postponement allows more time for employers and developers to adapt and for lawmakers to revise the law [2]. It also provides an opportunity for Colorado to learn from other states and align with national and international standards [6], facilitating a unified regulatory environment for businesses operating across state lines [6].
Key changes to the law include the removal of the requirement for businesses to notify the Attorney General about known or foreseeable risks of algorithmic discrimination and the elimination of the obligation for developers to exercise reasonable care in preventing discrimination. The definition of algorithmic discrimination has been narrowed to align with existing anti-discrimination laws [7], providing clearer legal standards [7]. While developers and deployers must still conduct risk assessments [1] [2], the focus will shift to specific areas such as accessibility [1] [2], labor law violations [1] [2] [3], unfair trade practices [3] [7], and deceptive trade practices [1] [2] [7]. Additionally, developers are now required to disclose potential risks of violating the Colorado Privacy Act and assess whether their AI systems pose known or foreseeable risks to privacy.
Individuals can contest decisions where AI was a “substantial factor,” but the law raises the threshold to require that AI be the “principal basis” for triggering appeal rights [2], making it more challenging to challenge workplace actions [1] [2]. Startups and small developers with less than $10 million in outside investment and under $5 million in annual revenue are exempt from key obligations if they have been operating for fewer than five years [1]. Organizations releasing open model weights are also exempt from certain requirements [1].
Governor Polis has expressed opposition to proposed legislation that seeks to overhaul the state’s anti-AI bias law, advocating for reduced reporting requirements for developers and users of AI systems [4]. He also supports enhanced authority for the state attorney general to address consumer complaints regarding automated decisions [4]. The 2025 legislative session will be critical for discussions on SB24-205 [6], as striking the right regulatory balance is crucial to prevent stifling innovation while maintaining a competitive business environment in Colorado [6]. A multi-stakeholder approach and ongoing support for ethical AI development are essential for Colorado to position itself as a national leader in AI governance [6]. Following extensive discussions by the task force [5], plans for rulemaking by the Attorney General’s office will be initiated after the legislative changes are finalized.
In addition, Colorado lawmakers have introduced Senate Bill 318 (SB 318) [3], which aims to amend the state’s artificial intelligence law [3]. This proposed bill seeks to alleviate administrative burdens on small businesses by exempting them from certain requirements and extending the implementation timeline. Initially, it would apply to companies with over 50 employees and later to those with more than 100 employees worldwide by April 1, 2029 [3]. The bill also aims to modify the grounds for consumer appeals regarding adverse decisions and expand consumer disclosure obligations, while some provisions will take effect earlier on May 1, 2026. The revisions are welcomed by many in the tech sector as a means to prevent overregulation [7], though concerns remain among civil rights groups about potential weakening of protections against discrimination [7]. The trend towards increased AI regulation across the US is anticipated to continue [7], with more states likely to develop their own AI Acts in line with comprehensive state privacy laws [7].
Conclusion
The enactment of SB24-205 marks a significant step in AI regulation, setting a precedent for other states. While the law aims to protect consumers and prevent discrimination, it also raises concerns about potential impacts on innovation and competitiveness [2]. The ongoing legislative review and proposed amendments, including SB 318, reflect a careful balancing act between regulation and fostering a conducive environment for technological advancement. As Colorado navigates these challenges, its approach could serve as a model for AI governance nationwide, influencing future regulatory frameworks across the United States.
References
[1] https://www.fisherphillips.com/en/news-insights/is-colorado-getting-cold-feet-about-ai-regulation.html
[2] https://www.jdsupra.com/legalnews/is-colorado-getting-cold-feet-about-ai-9235123/
[3] https://www.hrdive.com/news/new-colorado-bill-would-revamp-landmark-ai-law/746788/
[4] https://news.bgov.com/ip-law/colorado-gov-polis-opposes-measure-to-revamp-sweeping-ai-law
[5] https://privacy-daily.com/news/2025/04/29/Bill-Updating-Colorado-AI-Law-Includes-New-Privacy-Risk-Requirement-2504290017
[6] https://www.archyde.com/colorado-leaders-urge-ai-legislation/
[7] https://captaincompliance.com/education/colorado-ai-act-rebooted/
