How Colorado's New AI Regulations Will Impact Your Business Operations

As we approach February 2026, Colorado businesses need to understand how the state's new AI regulations will affect even basic AI usage in their operations. Let's explore what this means for your business, even if you're just using AI for simple tasks like reviewing resumes or automating customer service.

Understanding the Basics

Think of Colorado's AI regulations like a new safety code - they're designed to protect consumers from potential harm when businesses use AI systems. Even if you're only using AI for seemingly straightforward tasks, if these tasks involve customer data or make decisions about people, you need to pay attention.

What Counts as a "High-Risk" System?

You might be surprised to learn that common business tools could be considered "high-risk" under Colorado's law. For example:

• Resume screening software that helps select job candidates
• Customer service chatbots that make decisions about service levels
• Email marketing systems that personalize content based on customer data
• Performance evaluation tools that use AI to assess employee metrics

These systems are considered high-risk because they make consequential decisions about people's lives - from job opportunities to service access.

Your New Responsibilities

If your business uses any AI tools that interact with customer data or make decisions about people, you'll need to:

1. Disclose AI Usage: Inform customers whenever they're interacting with an AI system. This includes chatbots, automated email responses, or any other AI-powered customer interaction.
2. Protect Against Discrimination: Ensure your AI systems aren't creating unfair biases, even unintentionally. For example, if you use resume screening software, you need to regularly check that it's not discriminating based on protected characteristics.
3. Provide Appeals Process: Allow people to challenge decisions made by AI systems. For instance, if an AI system denies a customer service request, there needs to be a human review option.
4. Maintain Documentation: Keep records of how your AI systems work and what steps you're taking to prevent discrimination.

Practical Steps for Compliance

Here's what you should start doing now:

1. Audit Your AI Usage: Make a list of every place your business uses AI, even in simple applications. You might be surprised how many tools include AI components.
2. Implement Disclosure Systems: Start developing clear ways to inform customers about AI interactions. This could be as simple as a notification on your website's chat feature.
3. Create Review Processes: Establish regular reviews of your AI systems' decisions to check for potential bias or discrimination.
4. Document Everything: Begin keeping detailed records of your AI systems, including what they do and how you monitor them.

Risk Management Considerations

Even simple AI applications can pose risks. For example:

• A resume screening tool might unintentionally favor certain demographic groups
• A customer service chatbot might make decisions that affect service access
• Marketing AI might create unintended discriminatory patterns in customer targeting

Preparing for Compliance

Start preparing now by:

1. Evaluating your current AI usage
2. Developing compliance procedures
3. Training staff on new requirements
4. Implementing monitoring systems

The Cost of Non-Compliance

Violations of these regulations will be treated as deceptive trade practices under Colorado law, which can result in significant penalties. More importantly, non-compliance could damage your business's reputation and customer trust.

Next Steps

Begin by:

1. Conducting an AI audit of your business operations
2. Consulting with legal experts about your specific situation
3. Developing a compliance timeline
4. Creating documentation and disclosure systems

Remember, these regulations affect businesses of all sizes using AI in any capacity. Even if you're just using basic AI tools, it's crucial to understand and prepare for these requirements now.

Need Help?

Consider working with AI governance experts who can help you:

• Identify AI systems in your business
• Develop compliance procedures
• Implement monitoring systems
• Create required documentation

The time to start preparing is now, even if 2026 seems far away. The complexity of these requirements means businesses need time to properly implement compliance measures.

Would you like more specific guidance about how these regulations might affect your particular business operations or AI usage?