Industry Snapshot: Technology Employer Considerations - May 2026

AI Hiring and Employment Decisions

Technology employers - both as builders of AI systems and as employers using AI in their own hiring - face a layered set of state-level requirements that reach a meaningful inflection point this summer.

• Colorado SB 24-205 (Colorado AI Act) takes effect June 30, 2026 after SB 25B-004 delayed the original February 1, 2026 effective date. Tech employers in Colorado that use AI in consequential employment decisions become "deployers" and must implement a written risk-management policy aligned with the NIST AI Risk Management Framework, complete an initial impact assessment within 90 days of the effective date, and provide consumer-facing notice and explanation when an AI system makes or substantially influences a consequential decision.
• Illinois HB 3773 has been in effect since January 1, 2026. The law amends the Illinois Human Rights Act to prohibit discriminatory use of AI in employment decisions and requires employers to provide notice when AI is used to evaluate candidates or employees.
• California AB 2930 is on track to take effect January 1, 2027 with similar requirements.
• NYC Local Law 144 has required bias audits of automated employment decision tools since July 5, 2023; tech employers using ATS scoring or skills-assessment AI for NYC hires must continue annual independent bias audits and post results.

Noncompete Enforcement and Engineer Mobility

The FTC's nationwide noncompete ban was struck down by the U.S. District Court for the Northern District of Texas in Ryan LLC v. FTC (August 20, 2024) and never took effect. State law remains the controlling regime, and the patchwork is sharply varied:

• California, Minnesota, North Dakota, and Oklahoma: noncompetes are largely unenforceable in employment.
• Washington: noncompetes are enforceable only above a statutory income threshold that is adjusted annually for inflation - $123,394.17 for employees in 2026.
• Massachusetts: noncompetes are limited to 12 months and require either garden leave (50% of the highest annualized base salary in the prior two years) or other mutually agreed consideration; employees terminated without cause cannot be bound.
• Illinois Freedom to Work Act: noncompetes are void for employees earning at or below $75,000 per year (and nonsolicits below $45,000); thresholds increase $5,000 every five years.

Tech employers operating across these states should not rely on a single template. Confidentiality and trade-secret agreements remain enforceable in nearly every state and are often the better tool for protecting source code and customer data.

Computer-Employee Exemption Under FLSA

The FLSA computer-employee exemption (29 U.S.C. § 213(a)(17)) remains an option for employees who meet the duties test - primarily software engineers and analysts performing systems analysis, design, development, or modification. The salary threshold is $684 per week (the standard FLSA exempt threshold after the November 2024 vacatur), or $27.63 per hour. Job titles like "software engineer," "developer," "DevOps," and "data scientist" are common qualifiers, but help desk, hardware support, and end-user training roles generally do not qualify. State thresholds (CA, NY, WA, CO) override where higher.

Practical Compliance Steps for Technology Employers

1. Inventory AI systems by jurisdiction. Map every AI or algorithmic system that touches hiring, performance, promotion, scheduling, or termination, and tag the jurisdictions where employees are located. Use this inventory to drive both Colorado AI Act readiness and any future Illinois, California, or New York City obligations.
2. Update noncompete templates by employee state of residence. Stop using a single national template. The cost of a state-by-state matrix is far less than the cost of a single unenforceable agreement on a key engineer.
3. Validate computer-employee exemption duties. Pull a sample of exempt computer employees and document, for each, which qualifying duties they actually perform. Title alone is not the test.
4. Confirm pay transparency compliance in postings open to applicants in jurisdictions that require salary ranges (California, Colorado, Hawaii, Illinois, Maryland, Minnesota, New York, Washington, DC, and several others as of 2026). Remote-eligible postings often trigger these obligations even if the employer has no physical presence in the state.

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This briefing is prepared by the AEA Editorial Team based on publicly available regulatory guidance and employment law developments. All analysis reflects general observations and should not be treated as legal advice. Consult qualified counsel for guidance on specific situations.