Lack of Balance: Proposed Labor Mandates Undermine Business Climate

The legislature’s Labor and Public Employees Committee reviewed a series of workplace mandates this week, adding to a growing agenda that further undermines Connecticut’s business climate.

The latest round of proposals again target small and medium-sized businesses, introducing new compliance obligations, operational restrictions, and potential cost increases.

Legislation discussed at the committee’s March 12 hearing expand workplace regulations, add onerous reporting requirements, and open employers up to additional litigation.

Many of the bills are failed measures recycled from previous sessions, including another attempt to allow striking workers to access unemployment benefits.

The following overview highlights five bills currently under consideration and the potential implications for Connecticut employers. 

Artificial Intelligence

SB 435 establishes new regulatory standards governing the use of artificial intelligence and automated decision-making systems in employment.

The bill is intended to address concerns that algorithmic tools used in hiring, employee evaluation, and workforce management could result in biased or discriminatory outcomes. 

Under the proposal, employers that use automated systems to make or assist in employment decisions could face new transparency, reporting, and oversight requirements.

Employers that use automated systems in employment decisions could face new transparency, reporting, and oversight requirements.

Depending on how the legislation is implemented, employers may be required to disclose the use of automated decision tools, evaluate systems for bias, and maintain additional documentation.

While the goal of ensuring fairness in employment decisions is widely shared, businesses have raised concerns about the scope and complexity of potential AI regulations.

Many companies already rely on widely used human resources software that incorporates automated screening or scheduling tools.

Inconsistent Compliance Obligations

If Connecticut adopts unique regulatory standards for these technologies, employers operating in multiple states may face inconsistent compliance obligations. 

Businesses are also concerned that regulatory uncertainty surrounding AI tools could discourage innovation or make it more difficult for companies—particularly small and mid-sized employers—to adopt technology that improves hiring efficiency and workforce management. 

The bill’s scope will make Connecticut’s AI regulatory framework the most restrictive and costly in the nation.

The bill also requires employers to conduct independent “impact analysis audits” through third party contractors, which can range anywhere between thousands of dollars to hundreds of thousands of dollars per audit, and require employers to evaluate automated systems on an annual basis. 

The bill’s scope will make Connecticut’s AI regulatory framework the most restrictive and costly in the nation.

In 2025, Colorado passed a similar measure that ultmately led to the state legislature coming back into session to delay its implmentation due to widespread concerns.  

Predictive Scheduling 

SB 436 expands regulatory oversight of employee scheduling practices, creating a new predictive scheduling framework for retail, food service, hospitality, and long-term care employers.

The bill mandates a 14-day schedule notice, predictability pay for schedule changes, minimum rest periods between shifts, priority hours for current employees, recordkeeping requirements, and an expanded private right of action. 

Businesses expressed concerns that additional mandates will create duplicative compliance obligations and administrative complexity.

Employers in the impacted industries regularly operate around changing circumstances due to customer demand, tourism, weather, holidays, and other contributing factors.

Businesses expressed concerns that additional mandates will create duplicative compliance obligations and administrative complexity that will ultimately impact hiring and staffing decisions, customer service, and the cost of goods and services for consumers. 

Self-Checkout Stations 

SB 438 establishes new operational restrictions on the use of self-checkout technology in grocery stores.

The legislation requires retailers to maintain specific staffing ratios and operational limits when self-checkout stations are in use. 

Under the bill, grocery stores will be required to: 

• Maintain one staffed checkout lane for every two self-checkout stations in operation 
• Assign one employee to monitor every two self-checkout stations 
• Limit stores to no more than eight self-checkout stations operating at any time 

Supporters argue the proposal is intended to maintain customer service standards and ensure staffing levels within grocery stores. However, retailers have raised several concerns. 

The bill effectively mandates staffing levels and store operations.

First, the bill effectively mandates staffing levels and store operations, limiting retailers’ ability to adapt to customer preferences and evolving technology.

Self-checkout systems are a widely adopted tool in the retail industry, allowing customers to complete transactions more quickly while helping stores manage peak demand periods. 

Second, the required staffing ratios could significantly increase labor costs for grocery stores.

Retail grocery operations typically operate on thin profit margins, and staffing mandates may create financial pressure—particularly for smaller independent grocers. 

Finally, some business groups raised broader concerns that restricting automation in retail could discourage innovation and limit operational flexibility for businesses trying to modernize store operations. 

Unemployment for Striking Workers 

For the third consecutive session in a row, the committee introduced a bill—HB 440—allowing workers engaged in a strike to be eligible for unemployment benefits. 

Under current Connecticut and federal law, workers participating in a strike are not eligible for unemployment benefits, as unemployment insurance is designed to support workers who lose their jobs through no fault of their own.

The U.S. Department of Labor released guidance last month reinforcing that UI benefits are strictly for those who are out of work through no fault of their own, are able to work, available to work, and actively seeking work. 

Expanding eligibility to striking workers represents a significant policy shift, placing additional financial pressure on the state’s unemployment insurance trust fund, which is funded primarily through private sector employer payroll taxes. 

The repeated push for this bill defies logic, federal law, and sends the wrong message about our business environment. If adopted, we risk losing federal grants to administer unemployment insurance programs while employers face higher unemployment taxes.https://t.co/MaObeGFa4W

— Chris DiPentima (@ChrisDipentima) March 12, 2026

If the trust fund experiences increased costs, employers ultimately face higher unemployment insurance taxes.

Business groups also note that providing benefits during labor disputes could potentially prolong strikes by reducing the financial pressure to reach agreements quickly. 

While Gov. Ned Lamont vetoed similar measures in the last two years, he faces mounting pressure from proponents of the bill.  

California Gov. Gavin Newsome vetoed similar legislation in 2023, citing similar concerns businesses have raised. 

Noncompete Agreements 

HB 5492 proposes significant restrictions on the use of noncompete and exclusivity agreements in employment contracts. 

Noncompete agreements are commonly used to protect legitimate business interests, including trade secrets, proprietary information, customer relationships, and investments in employee training.

These agreements are particularly common in industries where employees may have access to sensitive data or strategic business information. 

Supporters of limiting noncompete clauses argue that doing so would improve worker mobility and allow employees greater freedom to pursue new employment opportunities. 

However, employers caution that overly restrictive limitations could make it more difficult to protect confidential information and intellectual property.

Connecticut needs a balanced policy framework that protects workers while also supporting economic growth, innovation, and job creation.

Companies in industries such as technology, advanced manufacturing, finance, and professional services often rely on agreements as part of broader strategies to safeguard competitive advantages. 

Without effective protections, some businesses may become more cautious about sharing proprietary information internally or investing in specialized employee training programs. 

Taken together, these bills reflect a broader legislative effort to reshape workplace policies and labor regulations in Connecticut.

While each proposal addresses different policy goals—from regulating emerging technologies to paying workers voluntarily on strike—the cumulative effect will have a detrimental impact on employers. 

Business organizations across the state continue to emphasize the importance of maintaining a balanced policy framework that protects workers while also supporting economic growth, innovation, and job creation in Connecticut. 

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For more information, contact CBIA’s Paul Amarone (860.244.1978).