• States Lead on Workplace AI: With federal regulators slowing new rules, individual states are setting their own requirements for employers that use artificial intelligence (AI), creating a patchwork for multistate workforces.
• California’s Executive Order: Governor Gavin Newsom issued an executive order (EO) targeting AI-driven labor market disruption and directing state agencies to recommend updates to California’s Worker Adjustment and Retraining Notification (WARN) Act for AI-related mass layoffs.
• Connecticut’s New AI Law: Beginning October 1, 2027, employers must give written notice to applicants and employees when AI substantially influences a hiring, promotion, discipline, or termination decision.

In this episode of Employment Law This Week®, Epstein Becker Green attorneys Courtney McFate and Elizabeth S. Torkelsen break down two state actions shaping AI in the workplace: California Governor Newsom’s EO on labor protections in the age of AI, and Connecticut’s new transparency and nondiscrimination requirements for employers.

The new AI law has significant implications for employers in the Nutmeg State who use any type of “automated employment-related decision technology” and those contemplating mass layoffs or plant closings.

Use of AI Tools to Interact with Job Applicants and Employees

Starting October 1, 2027, employers who deploy an automated employment-related decision technology to directly interact with job applicants or employees must ensure that they disclose in plain language that the individual is interacting with such technology, unless a “reasonable person would deem it obvious” that they are doing so. The AI law does not explain what a reasonable person would deem obvious, so employers should exercise caution and provide actual disclosures until the state provides further guidance.

• Artificial Intelligence (AI) Conversations Are Not Privileged: In United States v. Heppner, a federal judge found that conversations with an AI tool are not privileged due to the tool's terms of service and privacy policy—a stark reminder that employers should not discuss active cases or employment matters with public AI tools.
• IT Company Fined for AI-Generated Job Postings: The U.S. Department of Justice imposed a nearly $10,000 fine on an IT company for posting AI-generated job advertisements that unlawfully excluded U.S. citizens—highlighting the need for employers to keep a human in the loop when using AI in hiring.
• Washington Bars Mandatory Employee Microchipping: Starting in mid-June 2026, Washington State will prohibit mandatory employee microchip implants, joining more than a dozen states that have banned the practice.
• Colorado Works to Repeal 2024 AI Law: A working group has proposed repealing and replacing Colorado's comprehensive AI law before its June 30, 2026, effective date, which would remove onerous compliance and reporting obligations on employers, including small businesses.

The results of this informal survey provide the opportunity not only to reflect on the challenges confronted by the global organizations we are privileged to represent, but also to prepare for what the legal landscape might hold in 2026. 

Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act prohibit employers from implementing facially neutral procedures that unintentionally discriminate against individuals based on their protected categories. The Equal Employment Opportunity Commission (EEOC) is the federal agency tasked with investigating claims of unintentional discrimination, called disparate impact.

According to an internal memorandum obtained by Bloomberg Law, the EEOC plans on closing all pending disparate impact discrimination charges based at the end of September 2025. Once these charges are closed, the EEOC is expected to issue right-to-sue letters allowing claimants to file their case in federal court. Charges that involve claims of both disparate impact and disparate treatment are likely to remain with the EEOC in normal course.

Key Takeaways for Employers:

• Anti-Discrimination Measures: The new regulations specifically target discriminatory practices in employers’ use of automated decision systems (ADS).

• Recordkeeping Requirements: Employers are now mandated to retain all ADS records and data for a minimum of four years.

• Regulatory Precedent: California’s proactive stance on AI regulation is anticipated to influence similar regulatory frameworks nationwide, establishing a precedent for other states.

In this episode of Employment Law This Week®, Epstein Becker Green attorney Frances M. Green provides an essential breakdown of the new California regulations, including actionable insights on conducting risk assessments and aligning them with existing cybersecurity and privacy audits to ensure compliance.

However, that discussion rarely centers on the types of training data used, and whether the training data itself could have a harmful effect on the workers tasked with training the AI model.

While they all relate to AI, the E.O.s otherwise vary considerably in subject matter: “Accelerating Federal Permitting of Data Center Infrastructure”; “Promoting the Export of the American AI Technology Stack”; and “Preventing Woke AI in the Federal Government.”

As we noted in our July 24 blog, the White House is clearly determined to outpace other countries so that the U.S. benefits from any gains provided by AI through building AI infrastructure and bolstering AI-related exports. The Center for Data Innovation, from its perspective, stated in a press release that the actions pursued by the executive orders will advance U.S. goals of global AI dominance and enable the U.S. to better compete with China.

The White House released the AI Action Plan on July 23, 2025, and delivered remarks on the plan during an AI summit. The same day, the president signed three AI-related Executive Orders to further the AI Action Plan, relating to: 1) “Accelerating Federal Permitting of Data Center Infrastructure”; 2) “Promoting the Export of the American AI Technology Stack”; and 3) “Preventing Woke AI in the Federal Government.” Yet it remains to be seen whether and how successfully the AI Action Plan will unfold—particularly with respect to impacts on incongruous state regulatory action.

Likening the global AI race to the space race during the Cold War, the introduction to the 28-page AI Action Plan emphasizes the need “to innovate faster and more comprehensively than our competitors in the development and distribution of new AI technology across every field and dismantle unnecessary regulatory barriers that hinder the private sector in doing so.” 

In Executive Order 14179 of January 23, 2025—entitled “Removing Barriers to American Leadership in Artificial Intelligence”—President Donald Trump directed federal officials to develop an Action Plan to achieve the policies of sustaining and enhancing America’s dominance in global AI. The plan is expected to drop by July 23, to coincide with an address by the President outlining his vision for American AI.

The release of the Action Plan will follow a number of recent developments in AI at the state and federal levels that show no signs of abating. On July 15, for instance, the White House announced $90 billion in energy and data center investments in Pennsylvania, according to Reuters. Bloomberg reported the same day that President Trump is planning to sign another executive order to implement the Action Plan upon its release to push the policy forward.

Formerly known as HB 149, the Act requires a government agency to disclose to consumers that they are interacting with AI—no matter how obvious this might appear—through plain language, clear and conspicuous wording requirements, and more. The same disclosure requirement also applies to providers of health care services or treatment, when the service or treatment is first provided or, in cases of emergency, as soon as reasonably possible.

The Act further prohibits the development or deployment of AI systems intended for behavioral manipulation, including AI intended to encourage people to harm themselves, harm others, or engage in criminal activity (see a post by our colleagues on Utah’s regulation of mental health chatbots).

EO 14281 poses significant challenges for employers because it seeks to limit disparate impact liability but clashes with established state and local regulations and laws, such as New York City’s law regarding the use of automated employment decision tools. This tension underscores the increasing complexity of managing artificial intelligence (AI)-driven decision-making in the workplace amid shifting legal standards.