Executive Order Seeks to Preempt State AI Laws

The EO, Ensuring a National Policy Framework for Artificial Intelligence, directs the Attorney General to establish an AI litigation task force to challenge state AI laws. It also orders the Secretary of Commerce to publish an evaluation of existing state AI laws that conflict with the EO’s policy and withhold certain federal funding from states that retain these conflicting laws.

Particularly under scrutiny are laws aimed at preventing and mitigating algorithmic discrimination – the discriminatory outcomes that can result when employers use certain types of AI tools in recruiting and other employment decisions. The EO characterizes these laws as “requiring entities to embed ideological bias within models” and claims they may “force AI models to produce false results in order to avoid a ‘differential treatment or impact’ on protected groups.”

State and local AI laws have taken a variety of approaches to algorithmic discrimination. Some laws require employers to proactively assess AI tools used in employment for bias, while other jurisdictions have opted to issue regulations or guidance clarifying that certain uses of AI tools can violate existing discrimination laws.

The EO is very likely to be challenged. While federal laws can and often do preempt state laws in the same area, acts of Congress – not executive orders – are the usual vehicle. There is currently no federal legislation regulating AI, although the EO directs the Special Advisor for AI and Crypto and the Assistant to the President for Science and Technology to prepare legislative recommendations.

It remains to be seen how states with existing and pending AI laws will respond. Several AI laws affecting employers are slated to take effect January 1, and a Colorado law takes effect in June 2026. A New York City law requiring bias audits for automated employment decision tools has been in effect since 2023.

For employers affected by these laws, the safest course of action is to proceed as if they will remain in effect until a specific development rescinds, amends, blocks or delays a particular law or regulation.