This spring Colorado passed the country’s first comprehensive law over how companies and governments use artificial intelligence to make key decisions over people’s lives.

“Whether (people) get insurance, or what the rate for their insurance is, or legal decisions or employment decisions, whether you get fired or hired, could be up to an AI algorithm,” warns Democratic State Rep. Brianna Titone, one of the main Legislative sponsors of the bill.

The law isn’t aimed at deep fakes or fraud, which some states, including Colorado, have addressed in other laws, but applies to how AI is used in evaluating people for things like school applications, hiring, loans, access to health care or insurance.

It takes effect in 2026 and requires companies and some government agencies to inform people when an AI system is used. If someone thinks the technology has treated them unfairly, the law allows them to correct the data it’s using or file a complaint. It sets up a process to investigate bad actors.

“If you were fired by an AI process and you say, ‘Well, this is impossible, there’s no way I should be fired by this,’” Titone said, “you can find a resolution through the attorney general’s office to say, ‘We need someone to intervene and to double check that this process actually didn’t discriminate and have a bias against that person.’”

She said in some cases AI has been found to give people an advantage based on their names or hobbies such as, “if your name is Jared and you played lacrosse.”

Democratic State Rep. Manny Rutinel, another sponsor, said some provisions require companies to identify how algorithms could lead to discrimination and disclose how the data is used to train the systems.

“We still have a lot to do,” Rutinel said. “But I think this is a great first step, a really significant and robust first step to make sure that technology works for everyone, not just a privileged few.”

Colorado’s move is being eyed by other states

The Colorado law originated from a similar proposal introduced in Connecticut earlier this year, which failed to pass there. Other places have instituted narrower policies. New York City requires employers using AI technologies to conduct independent “bias audits” on some software tools and share them publicly.

“So the states are clearly looking at each other to see how they can put their own stamp on the regulation,” said Helena Almeida, the vice president and managing counsel of ADP, which develops AI payroll services for a number of large companies.

“It’s definitely going to have an impact on all employers and deployers of AI systems,” said Almeida of the Colorado law.

Matt Scherer, an attorney at the Center for Democracy and Technology, said companies have been using various automatic systems, not even referred to as AI, to make employment decisions for at least the last eight years.

“We really have so little insight into how companies are using AI to decide who gets jobs, who gets promotions, who gets access to an apartment or a mortgage or a house or healthcare. And that is a situation that just isn’t sustainable because, again, these decisions are making crucial aspects that make major impacts on people’s lives,” he said.

But he’s concerned Colorado’s law doesn’t allow individuals a specific right to sue for AI-related damages.

“There’s definitely a lot of worries among labor unions and civil society organizations that this bill just doesn’t have enough teeth to really force companies to change their practices.”

Plans to change the law are already underway – it’s just a start

When Democratic Gov. Jared Polis signed SB24-205 in May, he told lawmakers he did so with reservations, writing, “I am concerned about the impact this law may have on an industry that is fueling critical technological advancements across our state for consumers and enterprises alike.”

He said it’s best decided by the federal government so there’s a national approach and a level playing field.

However, Polis said he hopes Colorado’s law furthers the discussion of AI, especially nationally, and he asked lawmakers to refine it before it takes effect. A state task force will meet in September to make recommendations in February. Polis has outlined areas of concern and asked them to focus regulations on software developers rather small companies that use AI systems.

Polis said the law could be used to target those using AI even when it’s not intentionally discriminatory.

“I want to be clear in my goal of ensuring Colorado remains home to innovative technologies and our consumers are able to fully access important AI-based products,” he wrote.

Industry is watching this law and others possibly coming

Michael Brent, of the Boston Consulting Group, works with companies as they develop and deploy AI systems to identify and try to mitigate the ways AI could harm communities.

“Companies have a desire to build faster, cheaper, more accurate, more reliable, less environmentally damaging” systems, he said. He said Colorado’s law could encourage transparency for people affected by AI.

“They can get into that space where they’re having that moment of critical reflection, and they can simply say to themselves, ‘You know what? I actually don’t want a machine learning system to be processing my data in this conversation. I would prefer to opt out by closing that window or calling a human being if I can.’”

For all the focus on creating comprehensive regulations Democratic Rep. Titone said Colorado is very much at the beginning of figuring it out with the tech industry.

“We have to be able to communicate and understand what these issues are and how they can be abused and misused.”

Bente Birkeland covers state government for CPR News.

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