Connecticut Employers: Next Phase of Adapting to AI in Employment Decisions is Here

The integration of AI into employment decision-making offers substantial benefits in efficiency and scale, but a robotic application of this powerful new tool introduces significant legal risks.

On May 1, 2026, Connecticut lawmakers passed Senate Bill 5, the Connecticut Artificial Intelligence Responsibility and Transparency Act (“SB 5”). It now awaits Governor Lamont’s signature.

SB 5 is a broad law that addresses AI governance across multiple domains, including employment, and has several important implications for employers who use AI in the hiring process. Among its provisions, SB 5 includes anti-discrimination protections and disclosure requirements for companies that use automated systems to make employment-related decisions. Connecticut employers must review current policies and practices and begin to prepare the required notices and policy adjustments.

Specifically, effective October 1, 2027, employers who use “automated employment-related decision processes” (“AEDP”) are required to provide certain disclosures to employees and/or job applicants:

1. Any time the employer uses an AEDP that is intended to interact with an employee or applicant for employment in the state, the employer must disclose to that employee or applicant that the employee or applicant is interacting with such technology or technologies. This means employees and applicants must be told when they are interacting with an AI-powered “chatbot.”
2. If the employer uses an AEDP to generate any output for the purpose of making, or as a substantial factor in making, an employment-related decision concerning an employee or applicant, the employer must provide written notice before such employment-related decision is made to the employee or applicant, disclosing that;
   1. The employer has deployed an automated employment related decision technology;
   2. The purpose of the automated employment-related decision technology and the nature of such employment-related decision;
   3. The trade name of the automated employment-related decision technology;
   4. The categories and sources of personal data concerning such employee or applicant that the automated employment-related decision technology will analyze or process, and how the personal data will be assessed in reaching a decision;
   5. The sources of the personal data described in subdivision (4) and;
   6. Contact information of the employer.

The Act makes it an unfair or deceptive trade practice under the Connecticut Unfair Trade Practices Act (CUTPA) for an employer to violate either of these notice requirements. The Act grants the Attorney General exclusive enforcement authority for such violations, meaning individual employees and applicants cannot sue for non-compliance. It also requires that, for violations that occur before December 31, 2027, that the Attorney General believes are possible to cure, the Attorney General must issue a violation notice to the employer and give that employer 60 days to cure before it may bring an enforcement action against the employer.

The Act also amends the Connecticut employment discrimination law to classify as a “discriminatory practice” the use of an automated employment-related decision process in a manner that causes an employer to refuse to hire, discharge, or otherwise discriminate in compensation or in terms or conditions of employment on the basis of protected characteristics, the failure to provide required notices under SB5, or to retaliate against a person complaining or testifying about discriminatory practices. The Act also clarifies the Connecticut Fair Employment Practices Act to provide that the use of AI is not a defense to a complaint alleging discrimination.

The Act provides that developers of third-party tools are not required to provide the same information as deployers (e.g., employers) unless the AEDT was advertised, marketed, configured, contracted for, sold, or licensed to be used to materially influence an employment-related decision. Under the Act, employers may enter into a contract with the developer to assume these responsibilities; however, the contract must clearly set forth what duties the developer has assumed.