A California district judge issued a preliminary order allowing an AI hiring discrimination case against HR software provider Workday to proceed as a collective class action lawsuit. This case is part of a growing litigation trend against employers that use AI-driven hiring tools, and the outcome could shape how anti-discrimination laws apply to AI in employment decisions.
Last year, Derek Mobley sued Workday claiming discrimination based on age, race, and disability. Four additional plaintiffs joined the suit with similar age-related discrimination claims. The plaintiffs, who are all over 40 years of age, received repeated, near-instant rejections after applying to numerous jobs through Workday’s platform. They allege that Workday’s algorithm disproportionately excluded their applications based on age.
Implications
This case shows the increased scrutiny of employers using AI hiring tools, underscoring the focus on algorithmic bias and lack of transparency. The plaintiffs’ claims are based, in part, on a disparate impact theory of liability.[1] A disparate impact claim challenges an employment practice that is facially neutral but disproportionately affects members of a protected group. Unlike disparate treatment claims, disparate impact claims do not require proof that the employer intended to discriminate. As a result, employers may face exposure when using AI hiring tools if those tools produce disproportionate outcomes for protected groups, including where algorithms replicate historical biases embedded in training data.
Employers using AI hiring tools face an expanded litigation risk with regards to large collective or class action lawsuits. Additionally, claims may be brought against multiple employers using the same platform.
Key Takeaways
To decrease the risk of potential litigation, employers should:
- Evaluate whether their hiring screening tools produce disproportionate outcomes
- Understand how AI technology is being used in the hiring process and how decisions are generated
- Ensure human oversight of AI-driven decisions
- Conduct diligence on vendors, assessing contractual protections and representations
- Maintain clear documentation explaining hiring decisions
Although this case is in the early stages, the outcome will likely influence future lawsuits against employers and vendors, regulatory actions, and best practices for using AI in HR.
Employers should take proactive steps to mitigate potential risks. For questions regarding the use of AI hiring tools, please reach out to the Poyner Spruill employment team.
[1] In April 2025, President Trump issued Executive Order 14281, Restoring Equality of Opportunity and Meritocracy, directing federal agencies to curtail reliance on disparate impact theories where permitted by law. Disparate impact claims, however, remain available under Title VII. See 42 U.S.C. § 2000e-2(k).
