Workday appears unable to brush off a lawsuit alleging discrimination filed against its AI hiring tool in California, serving as a reminder of how companies may soon have to take greater accountability for their technological investments and offerings. The class action lawsuit against Workday was initially filed in 2023, with the case claiming that the company’s AI applicant screening tool was unfairly biased against certain sections of workers. Workday attempted to have the allegations of bias with its AI dismissed over jurisdiction of use, but California Judge Rita F. Lin determined that there was sufficient cause to let the case, and the additional disability discrimination claims, stand and unfold in court.
A California Judge has rejected efforts to dismiss a lawsuit alleging bias and discrimination propagated by Workday’s AI recruitment tools. (Image: Pexels)
Workday’s Efforts to Dismiss a Discrimination Lawsuit Rejected by California Judge
Workday, provider of a popular AI-assisted screening tool used in hiring, was accused of allowing a biased tech tool to be put into circulation. The lawsuit, filed in California, cited state laws in asserting its claims of discrimination and decision to hold Workday accountable. But the company attempted to have the cases dismissed by claiming that the state’s anti-discrimination laws could not be applied when the tool was used in the screening of candidates in other states and countries.
Judge Rita Lin of the US District Court for the Northern District of California, however, did not see things the same. According to her ruling, as the company was headquartered in California and because its AI tools were maintained there, there was sufficient connection to the state. As a result, California’s Fair Employment and Housing Act can apply to the company and its tools, even if not all the plaintiffs were residents of the state.
The judge established that Workday did not deny that these AI tools were “designed, developed, maintained, and controlled” in the state of California, and suggested that the screenings, results, or repercussions of the tool’s usage originated from the state where FEHA was applicable. The judge had previously rejected Workday’s attempts to have the lawsuit on discrimination dismissed back in 2024. This time as well, the decision was upheld, although some of the race-based allegations tied to parts of the case were dropped.
Workday Faces a Lawsuit Alleging Discrimination And AI Bias
The lawsuit alleging discrimination by Workday’s AI tools was first filed by Derek Mobley, whose initial case against the company was dismissed, leading to an amended complaint being registered subsequently in 2024. He claimed that he had been turned down from over 100 jobs that he had applied to using the Workday platform since 2017, often within hours of applying. This led him to believe that the decisions were automated. He stated that his application was rejected each time across employers, despite meeting or exceeding the requirements for the role.
The lawsuit alleged that the Workday platform, which was used by many employers to screen job candidates, discriminated against them based on race, age, and disability in violation of Title VII of the Civil Rights Act of 1964, as well as other federal laws. “Because there are no guardrails to regulate Workday’s conduct, the algorithmic decision-making tools it utilizes to screen out applicants provide a ready mechanism for discrimination,” the plaintiff’s lawyers explained.
The plaintiff was eventually joined by other co-plaintiffs, and the collective action case was finally approved in May 2025. A Workday spokesperson told HR Dive that the claims made in the case of hiring bias, discrimination, and AI tools making hiring decisions are false. The company stated that its recruitment tools only assess job qualifications and not protected traits, and they do not make hiring decisions, as their customers remain in control of the hiring process.
The Results of the Lawsuit Against Workday Could Set An Important Precedent for Application Screening Tools
As we see how the discrimination allegations and the overall lawsuit against Workday unfold, employers and hiring technology providers should soon understand how to navigate such matters in the future. There are many questions that this case brings up, on matters of jurisdiction, the degree of human supervision with AI recruiting tools, and the ultimate matters of bias in hiring. For vendors especially, the case may ultimately determine their own degree of accountability in how their tools are used and managed, particularly if utilized for automated decision -making.
Employers need to remain wary of the limitations of the tools they employ and ensure that there is sufficient record-keeping and supervision internally to check that these tools are working as intended, free from bias and any hints of discrimination in their deployment. Just as employers can be held accountable for biased hiring, firing, and management decisions made by their recruitment teams, they may also have to answer for the tools they utilize at work.
We are only just seeing laws regulating the use of AI being set in place, with Colorado being the latest to move in on regulating surveillance pricing and AI-based wage setting. Lack of preparation and internal auditing to oversee daily operations could lead to more severe issues in the coming years, as these regulations are further formalized.
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