Texas Passes AI Governance Law – Here’s What Employers Need to Know

By Amanda Allen

BLOG OVERVIEW:
Texas has passed a statewide law governing the use of artificial intelligence (AI), including in employment. The law, which focuses on the prohibition of intentional discrimination based on protected characteristics, follows a larger trend of states and cities passing laws regarding the use of AI and other automated decision systems.

On June 22, 2025, Texas enacted legislation governing the development and use of artificial intelligence (AI) systems. House Bill 149, Texas Responsible AI Governance Act (TRAIGA), which takes effect January 1, 2026, covers AI systems, defined as “any machine-based system that, for any explicit or implicit objective, infers from inputs the system receives how to generate outputs, including content, decisions, predictions, or recommendations, that can influence physical or virtual environments.”

Provisions Within the Law

TRAIGA specifically focuses on the prohibition of intentional discrimination and prohibits developing or deploying AI systems that intentionally “infringe, restrict, or otherwise impair” any rights guaranteed under the U.S. Constitution, or discriminate against a person based on protected characteristics, including race, color, national origin, sex, age, religion, and disability. In particular, it specifies that “a disparate impact is not sufficient by itself to demonstrate an intent to discriminate” raising the burden of proof required to establish “unlawful discrimination.” The Texas Attorney General will have exclusive enforcement power, including the ability to issue civil investigative demands. 

The law also establishes a regulatory sandbox program for testing AI systems without full regulatory authorization in order to promote the safe and innovative use of AI systems, allow entities to test AI systems, and encourage the responsible deployment of AI systems.

While TRAIGA does not include a risk mitigation policy requirement, it provides certain safe harbor provisions to protect against liability under the Act, including:

• If a third party misuses the AI system in violation of the Act, or 

• If a violation is discovered through certain enumerated means, such as:
  1. Feedback mechanisms,
  2. Testing (e.g., red teaming),
  3. Following state established guidelines (this may include future guidelines published by the Texas Artificial Intelligence Council), or
  4. An internal review process if the AI system substantially complies with the National Institute of Standards and Technology’s (NIST’s) AI Risk Management Framework or other nationally or internationally recognized risk management framework.

Part of a Larger Trend

TRAIGA’s safe harbor provisions reflect a broader trend in state AI regulation. For example, California’s Fair Employment and Housing Act Amendments, which go into effect on October 1, 2025, create an affirmative defense for entities that conduct anti-bias testing. Similarly, Colorado’s Senate Bill 24-205, which has been delayed to June 30, 2026, establishes a rebuttable presumption of reasonable care if certain conditions are met, including the implementation of a risk management program consistent with NIST.

DCI is currently conducting a full analysis of TRAIGA and its applicability to employers and will publish updates as necessary.