AI LLC, the Elon Musk-founded artificial intelligence company responsible for the Grok generative AI chatbot, has obtained a stay on enforcement of Colorado SB24-205, the state’s flagship AI consumer protections bill. This stay also applies to revised bills seeking to amend the original, including SB26-189 (Automated Decision-Making Technology), which was signed into law on 14 May. This compliance alert considers the detail of the Federal Court’s order, the additions made by SB26-189, and the implications of both for organizations operating in Colorado.
Please note that as of May 6, 2026, xAI is now operating as SpaceXAI, after an acquisition by Musk’s aerospace business in February 2026. This article aligns with the naming currently used in the legal process.
Summary
On April 9, 2026, X.AI LLC filed a federal lawsuit (X.AI LLC v. Weiser) in the U.S. District Court for the District of Colorado. X.AI LLC v. Weiser challenges Colorado Senate Bill 24-205 on constitutional grounds and features the United States of America as a Plaintiff-Intervenor, with Colorado Attorney General Philip J. Weiser named as defendant.
On April 24th, the plaintiffs and defendant entered into a joint motion to suspend case deadlines and temporarily stay enforcement. This was granted two days later on the basis that it “will avoid burdening the parties with the costs of litigating, promotes judicial economy and efficiency, does not negatively impact nonparties, and is in the public interest.”
The resulting order prevents the state of Colorado from pursuing enforcement under SB24-205 (or any legislation replacing or amending it) until 14 days after the Court issues a ruling on xAI’s forthcoming motion for a preliminary injunction in this case.
Subsequently, Colorado has issued a revised version of its AI Act, Senate Bill 26-189, with new requirements regarding the use of automated decision-making technology (ADMT) in consequential decisions. The new bill:
- Orders developers to “provide ADMT deployers with technical documentation describing the ADMT’s intended uses, categories of training data, known limitations, and instructions for appropriate use and human review.”
- Requires developers to notify deployers of material updates or modifications.
- Directs developers and deployers to retain records that demonstrate compliance with the bill for at least three years.
- Orders deployers to provide clear and conspicuous notice to consumers at the point of interaction with a covered ADMT.
- Requires deployers to provide a plain language description of the ADMT’s role within 30 days of the ADMT making a consequential decision that results in an adverse outcome for the consumer.
The SB26-189 additionally establishes various rights to request and correct personal data used by the ADMT, and the right to request meaningful human review and reconsideration after ADMT involvement in an adverse outcome. The bill goes into effect on January 1, 2027.
xAI has 28 days from the final adoption of rulemaking implementing SB24-205/SB26-189 to submit its motion for a preliminary injunction.
Who Is Impacted and What Actions Are Required?
Employers operating in Colorado and utilizing automated decision-making technologies in their talent decisions (i.e. “deployers” in the language of the bill) now have until January 1, 2027, to comply. These employers should use the time to ensure they have aligned themselves with the new requirements in Senate Bill 26-189, as well as those carried forward from SB24-205.
However, companies must also continue to monitor litigation and legislative activity closely, as the X.AI LLC v. Weiser lawsuit remains ongoing and could lead to further pauses or modifications.
How Affirmity Can Help
If your organization uses artificial intelligence anywhere in its employment selection processes, you need to be sure that your systems are legally defensible in the face of evolving state and federal employment laws. Affirmity’s AI system compliance risk assessment service will help you fully assess AI risk through statistical analysis and a full review of the tool and its documentation.
We can also help you more easily keep track of key issues like the one featured in this alert. In addition to our compliance alert series (sign up here so you don’t miss them!), our newly launched HR compliance guidance solution, Employment Law Navigator, helps you track laws, reduces multi-state compliance complexity, and puts invaluable time back into your working day.
Protect your organization and learn more about what Affirmity has to offer: Contact our team of experts today.
About the Author
Kim Hendon oversees account management and sales for Affirmity. She is responsible for building successful, long-term partnerships with clients and generating new business. Having served with the company for more than 25 years, Ms. Hendon has in-depth knowledge and broad experience in all areas of workforce analytics and HR compliance.
Ms. Hendon assists clients with the planning and development of workforce compliance and non-discrimination programs, as well as employee engagement initiatives. She holds a Bachelor of Arts in Speech Communication and a Master’s in Business Administration. Connect with her on LinkedIn.