Business and Community Development Assistance

AI Small Business Program Plan

This session, the legislature passed a law requiring the Department of Economic and Community Development (DECD), in consultation with other state agencies and public institutions of higher education, to develop a plan to establish an artificial intelligence (AI) small business program. Under the law, the program must (1) provide financial assistance to eligible small businesses to adopt and use AI to improve productivity and the quality of the business’s products or services and (2) establish a competitive small business environment for the development and use of AI technologies. As a condition of receiving financial assistance under the new program, recipients must train their employees to work with AI and prepare employees whose jobs may be displaced by AI for new jobs with the business (SA 26-23, effective from passage).

Surveillance Pricing

Beginning July 1, 2027, a new law generally prohibits retailers and third-party delivery services from using surveillance pricing either in-person or online. It also requires those who are doing business, but are not retailers, that use surveillance pricing to increase the price of a consumer good or service online to make certain disclosures in their online advertisements, among other places (PA 26-130, §§ 11 & 19, primarily effective July 1, 2027).

Funeral Service Contracts

A new law establishes a funeral service guaranty account to provide restitution to victims of unlawful practices related to funeral service contracts. It also requires (1) providers of these contracts to give purchasers a copy of DCP’s fact sheet on funeral service contracts and (2) purchasers to attest in the contract that they had time to review the fact sheet. The new law also creates a working group to study issues related to prepaid funeral service contracts, consumer protections for purchasers, and the guaranty account (PA 26-57, effective upon passage, except the fact sheet provisions are effective July 1, 2026).

Payroll Tax Working Group

A new law creates a 14-member working group to study and provide recommendations on establishing a payroll tax program for state employees. Among other things, the study must examine (1) program participation considerations, including whether it should be mandatory or optional and the role of union negotiations; (2) payroll tax rates and credits for different wage levels; (3) any statutory wage reductions for participating; (4) methods to mitigate lower Social Security benefits caused by participating; and (5) any financial impact on state revenue if participation were mandatory for both employers and employees. The working group must report its findings and recommendations to the Finance, Revenue and Bonding Committee by January 1, 2027 (PA 26-68, § 249, effective upon passage).

Contractor Worker Retention

This session, the legislature enacted a law that generally requires entities that take over certain service contracts at covered locations (cultural centers, shopping malls, and industrial sites, for example), contract out services, or receive property in a sale or transfer to retain the terminated contractor’s employees for at least 90 days. It requires advance notice to (1) a contractor whose contract will be terminated or not renewed, (2) employees, and (3) the union representing employees.

The new law also specifies that terminated contractors can take disciplinary action against an employee (such as termination) if the employee’s attendance or performance records would lead a reasonably prudent employer to take similar action. These actions must be consistent with state law or the employee’s collective bargaining agreement and occur before the (1) start of the successor service contract or (2) successor employer gets control of the site or sites covered by the contract (PA 26-68, § 247, effective July 1, 2027).

Warehouse Workers

A new law limits the extent to which employers at certain warehouse distribution centers can require their employees to meet production quotas. It generally applies to employers that employ at least (1) 250 employees at a single warehouse distribution center in the state or (2) 1,000 employees at multiple warehouse distribution centers in the state. Among other things, the new law also:

1. requires the covered employers to give their employees a written description of their quotas and any adverse employment actions they may face for failing to meet them,
2. prohibits the employers from using quotas that prevent compliance with the state law on meal periods or interfere with the employee using the bathroom, and
3. requires employers to give copies of their quota records to employees who believe that meeting a quota caused a violation.

Under it, employees aggrieved by a violation of the law may bring a civil action in Superior Court, which may assess civil penalties (PA 26-1, §§ 50-57, effective July 1, 2026).

Heat Safety Standards Task Force

A new law creates a task force to study workplace heat safety standards, including examining (1) best practices to prevent employees’ exposure to the risk of heat illness and (2) other states’ laws and regulations on heat safety standards (PA 26-68, § 202, effective upon passage).

Freight Rail, Sea Lanes, and Ports Working Group

This session, the legislature passed a law requiring the Connecticut Port Authority executive director (or his designee) to convene a working group to study and make recommendations on, among other things, policies and incentives to encourage the use of freight rail, sea lanes, and ports to transport goods in the state (PA 26-63, § 25, effective July 1, 2026).