President Trump just signed a sweeping new executive order directing the federal government to file lawsuits and cut funding to states that regulate artificial intelligence, a move that could have a dramatic impact on the use of AI in the workplace. Thursday’s order begins an aggressive federal effort to challenge and ultimately preempt state AI regulations, including employment-focused laws governing hiring, surveillance, and workplace decision-making. But EO faces challenges from state leaders across the country, and employers may feel caught in the middle. I have questions about what still applies, what can go wrong, and what to do next. The FAQ below details the top questions and answers from our customers.
What does the executive order (in plain English) try to do?
The EO, which can be read here, seeks to reduce the impact of national AI regulation by:
Directing the Department of Commerce to identify “unfavorable” state AI laws and challenging some of them with the Department of Justice Creating an “AI Litigation Task Force” at the Department of Justice to challenge certain state AI laws as unconstitutional, preemptive, or illegal Leveraging federal leverage (particularly broadband funding and potentially other discretionary grants) to prevent states from enacting/enforcement of certain AI laws May pre-empt some state requirements from the FCC and Federal Preemption Framework Prompts Congress to Enact Legislation That Activates FTC Actions
Will the EO immediately override state AI laws?
no. All current and pending state and local AI laws will continue to be enforced unless a court prohibits them by injunction or Congress passes a federal law preempting them.
Should employers stop complying with state AI employment/supervision rules now?
no. At this time, all state and local laws remain enforceable unless specifically prohibited. The best way to think of an EO is that it directs executive branch officials to initiate a process of federal pressure and litigation against states, and is not itself a regulatory action.
What are the policy objectives stated by the EO?
The EO states that it is U.S. policy to “maintain and enhance” America’s global AI advantage through a “minimized burdensome national policy framework.”
Why is Colorado specifically mentioned?
The EO document cites Colorado’s “algorithmic discrimination” law (scheduled to go into effect in June 2026) as an example, arguing that models can be pressured to produce “erroneous results” to avoid discriminatory treatment or impact.
What other state/local employment AI laws are in focus?
In addition to Colorado law, here are some other workplace laws and regulations that directly apply to the area covered by the EO.
The Commerce Department’s assessment marks the administration’s first official list of what it considers “troublesome,” but we can expect these and more to be included on the list.
What will happen in the next 30 days?
The Attorney General must establish an AI Litigation Task Force within 30 days. Its “sole responsibility” is to challenge state AI laws that conflict with EO policies.
What will happen in the next 90 days?
EO includes several key 90-day triggers.
The Department of Commerce must publish an assessment identifying “onerous” state AI laws and those that should be referred to the Department of Justice’s task force The Department of Commerce must issue a policy notice linking a state’s eligibility to receive funds through the Broadband Equity Access and Deployment (BEAD) program to the presence or absence of “onerous” state AI laws The FTC must issue an assessment of the FTC Act on AI Models (UDAP) The FCC will be directed (after the Department of Commerce’s identity is made public) to begin proceedings regarding federal reporting/disclosure standards for AI models that could preempt conflicting state laws.
What is BEAD and why is it included in the AI EO?
BEAD is the primary federal broadband funding program. The EO directs the Department of Commerce to issue a policy notice linking AI policy to eligibility for broadband programs and exempting states with “onerous” AI laws from eligibility for non-implementation funding (to the fullest extent permitted by law), particularly because AI relies on high-speed broadband networks.
Are employers likely to be targeted by the Department of Justice’s AI Litigation Task Force?
EOs are structured around challenges to state laws (i.e., lawsuits targeting the state or state officials who enforce the law). So far, there is no indication that the federal government will attack employers who use AI in the workplace.
What are the legal vulnerabilities of EO?
Opponents have already indicated they intend to challenge EO’s reach. Some of the arguments that may be raised include:
Federalism/10th Amendment: States traditionally regulate employment, civil rights, and consumer protections. There is little doubt that states such as California and New York will challenge federal efforts to supplant state authority. Limitations on spending provisions: States are likely to argue that making federal funds conditional on state actions is mandatory or not sufficiently related to the purpose of the funding program. Agency Preemption: If an FCC/FTC action attempts broad preemption without clear legal authority, litigation may arise over this attempt at executive power.
Are Republicans coming to terms with this presidential election?
The Washington Post reports that Florida Governor Ron DeSantis and Sen. Josh Hawley (R-Missouri) have criticized the federal government’s attempt to block the state’s AI law, and other conservative leaders may also oppose the move.
Does the EO include carve-outs aimed at mitigating that opposition?
yes. The EO’s legislative recommendations are directed against proposals that preempt legal state AI laws related to:
Child safety AI computing/data center infrastructure (with limited exceptions) State government procurement/use of AI Other topics to be determined
Notably, these carve-outs do not explicitly protect state AI laws related to employment, so workplace rules are likely to remain a battleground.
What would Congress likely do?
Although the EO specifically seeks legislative recommendations from Congress, the path to actual federal law remains unclear. As recently as last week, efforts to include AI preemption in the federal NDAA failed despite President Trump’s explicit calls for Congress to block the AI Act through legislative maneuvering.
If state AI laws are ultimately blocked or preempted, will employers be immune from the risk of employment discrimination while using AI?
no. The EO covers state AI laws. It does not repeal Title VII, ADA, ADEA, other federal EEO frameworks, or state anti-discrimination laws. So even if state AI laws are weakened, employers could still face disparate treatment and disparate impact claims, maladjustment issues where algorithms single out people with disabilities, claims challenging automated decision-making as discriminatory, and other similar arguments.
What should employers do now?
Despite all the uncertainty, there are some practical steps you can take to best position your organization for the near future.
Be sure to comply with state laws. Requirements in Colorado, California, Illinois, New York, and other states remain scheduled unless a court rules otherwise. Build an internal inventory of AI tools. In particular, we will focus on recruiting, promotion, monitoring, scheduling, productivity scoring, sentiment or voice analysis, safety predictive tools, and other similar tools. Strengthen AI governance and documentation. Even under federal standards, you can benefit from data retention plans, bias testing protocols, human controls, clear vendor documentation, and risk assessments for high-stakes use cases. You can start here. Update vendor contracts. Make sure you can pivot if state regulations remain in effect, new federal standards emerge, or if your vendor wants to adjust compliance language. Check out some guidance here. Keep an eye on the next three federal deliverable dates and Congress. The Department of Justice Task Force (30 Days), the Department of Commerce’s “Adverse Laws” List (90 Days), and the BEAD Policy Notice (90 Days) are expected to be published online in early 2026. What about Congressional action? That’s anyone’s guess at this point.
