Colorado Lawmakers May Make A Renewed Push to Codify Disparate Impact Discrimination Under CADA
Bayan Biazar, Associate
Colorado’s 2026 legislative session saw draft legislation[1] circulated that would have expressly codified disparate impact discrimination under the Colorado Anti-Discrimination Act (“CADA”), only for the draft legislations sponsors to ultimately postpone its introduction. Recent developments suggest that stakeholders in the legislative process may make a renewed version of the bill in the coming weeks.
Proposed Legislation That Didn’t Go Away
As we discussed in our February blog post on disparate impact risk in reductions in force,[2] Colorado lawmakers circulated draft legislation earlier this year that would have amended CADA to expressly define and prohibit disparate impact discrimination[3] across employment, housing, public accommodations and credit. The draft was ultimately not introduced during the 2026 legislative session. Recent communications among legislative stakeholders indicate the effort has not been abandoned and that advocates continue to signal that a bill along these lines is likely to be introduced in the near future.
What the Earlier Draft Would Have Done
The prior draft would have done four things: (1) added statutory definitions for “disparate impact,” “outcomes-based standard,” and “substantial, legitimate, nondiscriminatory interest;” (2) made disparate impact discrimination expressly unlawful across all areas governed by CADA, not just employment; (3) established a burden-shifting framework under which a complainant would first need to demonstrate disparate impact, after which the burden would shift to the respondent to show that the challenged policy or practice serves a substantial, legitimate, nondiscriminatory interest, with the complainant still able to prevail by identifying a less discriminatory alternative; and (4) clarified that the new standard would not be interpreted to require quotas or preferential treatment inconsistent with state or federal constitutional law.[4] Notably, the earlier draft did not include an express counterpart to the affirmative defenses[5] available to employers under Title VII of the Civil Rights Act, an omission that employer-stakeholders have flagged as a priority issue for any future draft.
Why This is Likely Happening Now
This renewed push tracks to the same federal backdrop we described in the February blog post. Executive Order 14281[6] directed federal agencies to deprioritize disparate impact as an enforcement tool, and both the U.S. Department of Justice and the U.S. Department of Housing and Urban Development have since moved to rescind or reconsider disparate impact regulations at the federal level. Proponents of state-level codification argue that these federal changes create uncertainty that a clear, statutory disparate impact standard under CADA would resolve, so that Colorado’s protections will not need to depend on the direction of federal enforcement priorities in any given administration.
Employer Considerations
Nothing has changed yet in terms of enacted law, and any renewed bill will still need to move through committee hearings, stakeholder input, and floor votes. But employers should not assume the issue is settled simply because the 2026 draft was not introduced. If a codified disparate impact law is enacted, it could meaningfully change litigation exposure by giving employees and the Colorado Civil Rights Division an explicit statutory framework and burden-shifting standard, rather than relying on disparate impact principles applied by analogy to federal case law.
The practical risk-management advice from our February post remains the same. Employers should use clearly defined, consistently applied selection criteria for decisions such as reductions in force, promotions, and hiring; run statistical analyses where appropriate to check for disparities; and maintain thorough documentation of the legitimate business reasons behind those decisions. Campbell Litigation will continue to monitor this legislation as a new draft emerges and will provide updates as the bill moves forward.
[1] See https://files.constantcontact.com/de30c015101/3a817135-4d23-4c76-a7a2-63b881167d67.pdf for the prior draft legislation.
[2] See https://www.rockymountainemployersblog.com/blog/2026/2/12/reductions-in-force-could-still-carry-disparate-impact-risk-nationally-and-in-colorado.
[3] Disparate impact addresses employment practices that are neutral on their face but disproportionately affect employees in protected classes. Griggs v. Duke Power Co., 401 U.S. 424, 91 S. Ct. 849, 28 L. Ed. 2d 158 (1971); 42 U.S.C. § 2000e-2(k).
[4] Under existing Colorado law, disparate impact remains a recognized theory of employment discrimination. Colorado’s statutory framework permits liability based on the effects of an employment practice while limiting the remedies available in such cases, reflecting a deliberate balance between outcome-based claims and claims involving purposeful discrimination. Colo. Rev. Stat. § 24-34-405. Colorado law also directs courts to interpret these protections consistently with federal anti-discrimination standards, ensuring that disparate impact continues to play a meaningful role in employment litigation and workforce-reduction decisions. Id. at § (6).
[5] See 42 U.S.C. § 2000e-2(k)(1)(A)-(C) (business necessity/job related defense and alternative-employment-practice standard); see also id. at § 2000e-2(k)(2) (business necessity defense unavailable against claims of intentional discrimination).
[6] See https://www.federalregister.gov/documents/2025/04/28/2025-07378/restoring-equality-of-opportunity-and-meritocracy for the full Executive Order 14281.