Hunton Retail Law Resource

Recently, the Colorado legislature sent a bill, HB 26-1210, to Governor Jared Polis’ desk that would place limitations on the use of artificial intelligence to either 1) set prices for consumers; or 2) set wages for employees.  Governor Polis vetoed the bill, citing vague and overly broad definitions in the bill’s text.  But the conduct prohibited in the bill has been the subject of numerous bills in legislatures all across the country. Retailers should take note and proceed with caution if using AI to set wages. 

Following the enactment of recent laws in New York and Maryland, dozens of states like Colorado have proposed legislation designed to combat “predatory pricing,” or “surveillance pricing.”  Such pricing, also known as data-driven pricing, is a term lawmakers use to describe the practice of using a customer’s personal data to determine the price of a good for that particular consumer.  The data prohibited may include a consumer’s genetic data, history of online behavior, and/or biometric information. 

The Colorado bill sought to apply the same or similar protections for employees in the wage setting context.  Though the Colorado bill failed, similar laws have been advanced in California, Maryland, New York, and Georgia.  And just last year, a Texas Congressman proposed H.R. 4640, titled the “Stop AI Price Gouging and Wage Fixing Act of 2025,” which prohibits “surveillance-based wage setting.”  The bill would prohibit employers across the country from using personal information, genetic information, behavior or biometrics to inform individual compensation decisions.  The current draft of the law allows for private rights of action for actual money damages, or $3,000, or any other legal or equitable remedy.  And Courts can triple any money damages awarded for willful violations.  

This momentum shows that retailers should proceed with caution if utilizing AI to set employee wages.  Retailers should ensure that AI tools used to set wages only consider lawful factors, such as employee responsibilities, performance, and seniority.  Including more personal or private factors, such as biometric information, or online presence/engagement, may invite scrutiny from regulators under existing legal frameworks, such as the Illinois Biometric Information Privacy Act, or state and local laws that protect workers from lawful off-duty conduct and, if the recent push continues, could violate future laws.