A federal court in San Francisco has allowed a class-action lawsuit against Workday, a human resources software company, to move forward, alleging its AI-based hiring tools discriminate against job applicants based on age, race, and disability. The case, one of the first to challenge AI in hiring, could set a precedent for how companies use such technology.
The Case Details:
Plaintiff Derek Mobley, who is Black, over 40, and has anxiety and depression, claims he was rejected for over 100 jobs at companies using Workday’s platform since 2017, despite being qualified. Four additional plaintiffs, all over 40, joined the suit, alleging age discrimination. They argue Workday’s AI tools, used by major employers to screen applicants, perpetuate biases by relying on data from existing workforces that may already reflect discriminatory patterns. The lawsuit cites violations of Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.
Court’s Ruling:
On May 16, 2025, U.S. District Judge Rita Lin ruled that Mobley’s claims met the threshold for a collective action under the Age Discrimination in Employment Act, allowing him to notify other affected applicants to join the case. Lin noted that Workday’s AI system, which scores and ranks applicants, plays a “crucial role” in hiring decisions, making the company liable as an employment agency under federal law. The judge rejected Workday’s motion to dismiss, emphasizing that distinguishing between AI and human decision-makers could undermine anti-discrimination laws.
Broader Implications:
- AI Bias Concerns: Experts warn that AI hiring tools, used by nearly 80% of U.S. employers, can replicate existing biases if trained on non-diverse employee data. For example, algorithms might favor candidates resembling a company’s predominantly white or male workforce.
- Legal Precedent: The case could clarify whether AI vendors like Workday are liable for biased outcomes, potentially reshaping how companies deploy automated hiring systems.
- Regulatory Gaps: While New York City requires bias audits for AI hiring tools, federal guidance is limited, especially after the Trump administration rolled back Biden-era AI regulations in January 2025.
Workday’s Response:
Workday denies the allegations, arguing it designs configurable tools and doesn’t control clients’ hiring processes. The company claims the lawsuit lacks specifics on how its software discriminates.
What’s Next:
The ruling allows the plaintiffs to gather evidence and expand the class action, potentially involving thousands of applicants. The case highlights the need for employers to audit AI tools for bias and ensure compliance with anti-discrimination laws, as scrutiny of AI in hiring grows.
This lawsuit underscores the risks of unchecked AI in employment and could push companies to prioritize transparency and fairness in their hiring technologies.