Tag: Automated Decision-Making Technology

  • Colorado’s New ADMT Law: What Small Businesses Need to Know Before January 2027

    Colorado’s New ADMT Law: What Small Businesses Need to Know Before January 2027

    With less than five months until Colorado’s New ADMT Law takes effect on January 1, 2027, small businesses should begin reviewing how automated decision-making technology is used across their operations. In May 2026, Colorado enacted Senate Bill 26-189, establishing new requirements for organizations that develop or deploy Automated Decision-Making Technology (ADMT) in consequential decisions. (Colorado General Assembly, 2026). 

    While many organizations are focused on future federal AI legislation or international regulations such as the EU AI Act, Colorado has already moved forward with a regulatory framework addressing transparency, consumer rights, documentation, and accountability in automated decision-making (Colorado Attorney General, 2026).

    For small and mid-sized businesses, the question is no longer whether AI regulation is coming. The question is whether your organization understands where AI is influencing important business decisions and what compliance responsibilities may follow. 

    What Is Colorado’s New ADMT Law?

    Colorado’s New ADMT Law governs the use of Automated Decision-Making Technology in consequential decisions affecting individuals. The law defines ADMT as technology that processes personal data and uses computation to generate outputs such as recommendations, classifications, rankings, scores, predictions, or other information used to assist decision-making. (Colorado General Assembly, 2026).

    However, not every AI tool falls under the law. 

    The requirements focus on what Colorado calls covered ADMT, meaning systems that materially influence a consequential decision affecting an individual’s access to opportunities, services, benefits, or resources. Consequential decisions may involve employment, education, housing, lending, insurance, healthcare, and public benefits. (Colorado General Assembly, 2026)

    This distinction matters because many businesses already use technology that assists decision-making in hiring, recruiting, risk assessment, customer evaluation, and service eligibility. 

    Why Small Businesses Should Pay Attention 

    Many SMB leaders assume AI regulations are aimed primarily at large technology companies. However, Colorado’s law establishes requirements for both developers and deployers of covered ADMT systems. This means organizations that use AI-powered technologies in their day-to-day operations may also have compliance obligations (Colorado General Assembly, 2026)

    For example, a business may use: 

    • AI-assisted hiring software 
    • Resume screening tools 
    • Lending or credit assessment platforms 
    • Insurance scoring technologies 
    • Healthcare eligibility solutions 
    • Risk evaluation systems 


    If these tools materially influence consequential decisions, businesses may be expected to understand how they work, maintain supporting documentation, and provide appropriate disclosures when required. (Colorado General Assembly, 2026)

    Transparency Requirements Under Colorado’s New ADMT Law

    One of the most significant themes within Colorado’s New ADMT Law is transparency. 

    The law includes requirements designed to help consumers understand when automated decision-making technology plays a role in decisions that affect them. Covered organizations may need to provide clear notice regarding the use of ADMT systems and explain how those systems contributed to certain outcomes (Colorado General Assembly, 2026). 

    This reflects a broader trend in AI regulation. 

    Across multiple jurisdictions, policymakers are increasingly focused on ensuring individuals know when technology is influencing significant decisions. Transparency is no longer viewed as a best practice. It is rapidly becoming a compliance expectation. 

    Consumer Rights Are Expanding 

    Colorado’s New ADMT Law also creates specific rights for consumers. 

    According to Colorado General Assembly (2026), Individuals may have the ability to request access to personal data used by covered ADMT systems, correct inaccurate personal information, and request meaningful human review when an automated decision contributes to an adverse outcome. These requirements reinforce the growing expectation that organizations maintain accountability when using AI-assisted decision-making processes.


    Businesses that rely heavily on automated systems should begin considering how they would respond if a customer, applicant, borrower, or consumer requested an explanation of how a decision was reached. 

    Documentation May Become Your Best Defense 

    A common theme across emerging AI regulations is documentation. 

    Colorado’s law includes record-retention obligations requiring developers and deployers to maintain records necessary to demonstrate compliance for at least three years (Colorado General Assembly, 2026). 

    For many organizations, this may require a shift in thinking. 

    Business leaders should ask: 

    • Which AI or automated systems are currently in use? 
    • What business decisions do they influence? 
    • What documentation exists regarding those systems? 
    • Can we explain how decisions are made? 
    • Do we have records demonstrating responsible use? 


    When regulators investigate, organizations are often expected to provide evidence, not assumptions. 

    Preparing for Colorado’s New ADMT Law Before January 2027

    While the compliance deadline is still several months away, organizations that begin preparing now will be better positioned to address documentation, transparency, and consumer rights requirements before the law takes effect.

    Consider taking the following steps:

    1. Create an inventory of AI-enabled systems currently in use.
    2. Identify where automated decision-making influences consequential decisions.
    3. Review vendor documentation and support resources.
    4. Understand disclosure and notification obligations.
    5. Begin establishing AI governance and oversight processes.


    Organizations that start these conversations today will be in a stronger position than those waiting until the final months before implementation.

    The Bigger Picture 

    Colorado’s New ADMT Law is about more than compliance. 

    It reflects an evolving regulatory approach focused on transparency, accountability, consumer rights, and responsible use of automated technologies. Similar themes continue to emerge across state, federal, and international AI governance discussions.

    For small businesses, this means AI governance is no longer just an enterprise issue. 

    As organizations increasingly rely on AI-assisted tools to help make decisions, leaders should expect greater scrutiny around how those systems are selected, managed, documented, and monitored.

    The future of AI regulation is arriving faster than many businesses expected, and Colorado’s New ADMT Law offers a preview of what responsible AI oversight may look like in the years ahead.

    Need Help Navigating Emerging AI Regulations?

    Colorado’s New ADMT Law highlights the growing need for AI governance, risk management, and compliance planning. As organizations adopt AI-enabled tools, understanding where automated decision-making influences business operations is becoming increasingly important.

    Intuitive Operations helps organizations identify AI risks, establish governance practices, and prepare for emerging regulatory requirements. Contact us to start the conversation.

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