Colorado Passes Landmark AI Regulation Bill To Tackle Discrimination

Colorado has become the first state in the US to enact comprehensive legislation regulating AI use in critical areas like employment, healthcare, and housing. 

From February 2026, affected businesses must provide information about their AI use and take “reasonable care” to protect citizens from algorithmic discrimination.

“Laws that seek to prevent discrimination generally focus on prohibiting intentional discriminatory conduct,” said Governor Jared Polis, who signed Senate Bill 24-205 (SB205) on May 17, 2024.

“Notably, this bill deviates from that practice by regulating the results of AI system use, regardless of intent.”

Addressing Algorithmic Discrimination

SB205 defines “high-risk artificial intelligence systems” as those that significantly influence decisions in areas such as education, financial services, employment, healthcare, housing, and legal services. 

AI systems are considered high-risk if they can potentially lead to differential treatment based on protected classifications such as age, disability, race, religion, or sex.

The legislation applies to developers who create or modify AI systems as well as the deployers who use them – with some exemptions for small businesses.

Requirements for AI developers and deployers

Under SB205, developers must disclose all known risks of algorithmic discrimination to the Colorado attorney general and publish a public statement on their websites detailing their AI systems and risk management strategies. 

Deployers must also implement comprehensive risk management policies, regularly review their AI systems, and notify the attorney general of any discriminatory outcomes.

Businesses using high-risk AI systems must provide detailed notices about the AI’s purpose, the type of decisions influenced, and the right to opt out of profiling in significant decisions. 

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Will regulation hamper innovation?

The legislation faced some pushback from across the tech industry. 

According to Politico, the tech lobby had urged Governor Polis to veto the bill, arguing that a state-by-state approach to AI regulation could stifle innovation. 

In Connecticut, Governor Ned Lamont vetoed a similar bill for the same reasons.

In his statement, Polis acknowledged these concerns and urged stakeholders to spend the next two years refining the bill to ensure it does not hinder technological progress. He also emphasized the need for a unified federal approach.

Other states are closely watching the outcome of Colorado’s legislative efforts. More than 40 states, including California, are considering some 400 AI-related bills, many of which address discrimination issues.