New Connecticut Law Restricts Employer AI Use, Mandates Notice for AI-Caused RIFs

Quick Hits

• Connecticut has enacted a comprehensive AI law that regulates the use and deployment of AI in consumer, employment, and government contexts.
• The new AI law will require employers to disclose the use of “automated employment-related decision technology” to employees and applicants when the technology output is making, or is a “substantial factor” in making, an employment-related decision concerning employees or applicants.
• Failure to comply with the notice requirements will be considered an unfair or deceptive trade practice, enforceable exclusively by the state attorney general.
• The law further prohibits employers from relying on AI tools as a defense against discrimination claims and will impose whistleblower protections for employees reporting AI-related safety concerns.

The signing of Substitute Senate Bill (SB) No. 5, Public Act No. 26-15, comes after the state legislature passed the amended legislation following a long back-and-forth during which Governor Lamont threatened to veto an earlier version of the bill in 2025. SB 5 provides a comprehensive regulatory framework for the deployment and use of AI technology across consumer, employment, and government sectors, imposes transparency, safety, and accountability requirements on developers and deployers of AI, and places restrictions on AI use.

Of specific relevance to employers, the law imposes a notice requirement when AI-powered tools are used in making employment-related decisions, clarifies that the use of AI tools is not a defense to antidiscrimination claims, provides whistleblower protections for employees of certain AI developers who report safety concerns or risks, and requires transparency about reductions in force related to the adoption of AI.

Notably, the law provides a short runway for employers to come into compliance with its terms, as some parts take effect as early as October 1, 2026, and others go into effect a year later, on October 1, 2027.

Automated Employment-Related Decision Technology Defined

The law applies to “automated employment-related decision technology” defined as “any technology that processes personal data and uses computation to generate any output, including, but not limited to, any prediction, recommendation, classification, ranking, score or other information, that is a substantial factor used to make or materially influence an employment-related decision” (emphasis added). Such “employment-related decisions” include decisions to hire, promote, discipline, or discharge an individual and decisions regarding tenure, terms, privileges, or conditions of employment.

The law specifically excludes certain common software or technological tools, such as word processing, spreadsheets, spellcheckers, map navigation, web domain registration and hosting processes, anti-virus or anti-malware software, and spam filtering. Notably, decisions resulting in “any nonmaterial change[s]” to job tasks, work responsibilities, hours, or work assignments are excluded, as are decisions relating to workplace health and safety, scheduling, and productivity monitoring.

Employers Required to Provide Notice to Employees and Applicants

Any employer that “deploys” (i.e., “puts into use”) automated employment-related decision technology in Connecticut (i.e., a “deployer”), on or after October 1, 2027, must ensure that employees and applicants who interact with the technology are told, in plain language, that they are interacting with automated technology. No disclosure is required where it would be obvious to a reasonable person that they are interacting with such technology.

On or after October 1, 2027, before making any employment-related decision using automated technology, a deployer will be required to provide the affected employee or applicant with a written notice disclosing:

• that the employer has deployed the technology;
• the purpose of the technology and the nature of the employment-related decision;
• the trade name of the technology;
• the categories of personal data the technology will analyze or process, and how the data will be assessed;
• the sources of that personal data; and
• contact information for the deployer.

A failure to provide such notice will “constitute an unfair or deceptive trade practice” enforceable by the state attorney general. For violations occurring before December 31, 2027, the attorney general may allow the employer sixty days after filing a notice of violation to cure the violation before bringing an enforcement action. The law explicitly states that it does not provide a private right of action for violations of the notice requirements.

Automated Decision Technology Not a Defense to Discrimination Claims

While there is no private right of action for violations of the law’s notice requirements, Connecticut’s employment discrimination law still provides a private right of action for discriminatory hiring practices, including those resulting from automated employment-related decision technology.

In fact, SB 5 amends Connecticut’s employment discrimination law to specify that the use of covered automated employment-related decision technology to make an employment decision is “not a defense against a complaint alleging a discriminatory practice.” Courts and the Connecticut Commission on Human Rights and Opportunities may, however, “consider evidence of anti-bias testing or similar proactive efforts to avoid the discriminatory factor” as a mitigating factor, including the quality, efficacy, recency, scope, and results of such testing.

Transparency of AI-Related RIFs Required

The law also requires that employers serving written notice on the Labor Department of plant closing or mass RIF pursuant to the federal Worker Adjustment and Retraining Notification (WARN) Act—which requires employers with one hundred or more employees to provide sixty days’ advance notice of certain plant closings or mass RIFs—must disclose whether the reductions covered by the notice “are related to the employer’s use of artificial intelligence or another technological change.” This provision takes effect on October 1, 2026.

Frontier Developers Prohibited From Retaliating Against Whistleblowers

Further, SB 5 establishes specific whistleblower protections for covered employees of “frontier developers” (i.e., “entities developing a ‘foundational model’”) who report safety concerns with such technology. “Foundation model[s]” are defined as “engineered or machine-based system[s]” that have some level of autonomy, can make inferences and take explicit or implicit actions, and “can influence physical or virtual environments.”

Specifically, large frontier developers may not discharge, discipline, or penalize covered employees for engaging in whistleblower activity protected under Connecticut law. Likewise, frontier developers may not retaliate against any employee for reporting that the developer “has engaged in any activity that poses a specific and substantial danger to the public health or safety due to a catastrophic risk.”

Further, large frontier developers must, by January 1, 2027, establish and maintain a “reasonable internal process” that enables covered employees to anonymously report information associated with a good faith belief that the “large frontier developer has engaged in any activity that poses a specific and substantial danger to the public health or safety due to a catastrophic risk.” The law further requires such developers to follow up on the report and “provide reasonable updates” on the status of any investigation and any actions taken in response thereto. Such updates must be disclosed to the developers’ officers and directors at least quarterly.

Additionally, frontier developers must provide clear notice to all covered employees of their rights under the bill, either by posting notices in the workplace and providing them to new and remote employees or by providing annual written notice to all employees with an acknowledgment. Frontier developers who violate whistleblower protections may face a civil penalty of up to $1,000 per violation, enforceable by the state attorney general.

Workforce Impact Study Mandated

The law also directs the Institute for Municipal and Regional Policy at the University of Connecticut to study the impact of AI on Connecticut’s workforce, including tracking RIFs and job displacement associated with AI, assessing the impact on entry-level employment and the impact on women and underrepresented populations in the workforce, and developing recommendations for workforce training and reskilling programs. The law also seeks to develop education and training for Connecticut workers to adapt to AI technology.

Next Steps

The signing of SB 5 makes Connecticut the latest jurisdiction to pass a sweeping AI law in recent years. Connecticut now stands near the top among the most comprehensive state laws and could influence other states to take similar approaches.

Employers in Connecticut and elsewhere may want to consider taking preparatory compliance steps, including:

• evaluating AI tools being used by the company to make or assist in employment-related decisions;
• reviewing the company’s notice and disclosure procedures currently in place for the use of AI tools;
• assessing whether a bias audit associated with AI tools being used to make or assist in employment-related decisions should be conducted to mitigate against potential disparate impact exposure;
• determining whether the company has an AI governance and use policy and, if not, implementing one; and
• evaluating whether RIFs may be related to the use of AI or other technological advances, and considering requirements and/or best practices for communicating the same.

This is a rapidly changing area of law as technology quickly develops and new concerns and enforcement priorities arise. In fact, Colorado lawmakers recently enacted a new law that pared back the Colorado’s landmark AI law and delayed the effective date to January 1, 2027, from June 30, 2026,  Furthermore, the Trump administration is focused on fostering AI advancement and use and is pushing for a federal framework that limits a patchwork of state and local AI laws, as detailed in a December 2025 executive order.

Ogletree Deakins’ Stamford office and Technology Practice Group will continue to monitor developments and will provide updates on the Connecticut, Cybersecurity and Privacy, Diversity, Equity, and Inclusion Compliance, Ethics/Whistleblower, Reductions in Force, Technology, and Workforce Analytics and Compliance blogs as additional information becomes available.

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