Update: Court Green Lights AI Hiring Discrimination Lawsuit

Heads up, HR: If you’re using Workday to streamline your hiring process, you’ll want to keep an eye on this AI hiring discrimination lawsuit.

A federal court in California recently allowed a disgruntled job seeker to proceed with a class-action lawsuit against Workday, a popular HCM platform that’s used by more than 10,000 companies.

The lawsuit accuses Workday of AI hiring discrimination based on race, age and disability. Here’s what you need to know.

Job Seeker Applies For More Than 100 Jobs – To No Avail

Derek Mobley is a Black man who is over the age of 40 and suffers from anxiety and depression. He said that since 2017, he has applied to more than 100 positions with companies that use Workday’s screening tools.

According to Mobley, the application processes generally followed a similar pattern. Typically, he’d see a job posting on a third-party website, such as LinkedIn. When he clicked on the job link, he’d get redirected to the Workday platform on the employer’s website. There, the Workday platform prompted Mobley to create a username and password to access the job opportunity. Then he’d upload his resume or input the info manually.

Mobley’s resume includes his graduation from Morehouse College – an all-male Historically Black College and University (HBCU) – in 1995. It also provides his employment history, which includes various financial, IT and customer-service roles.

According to Mobley, several job opportunities “required him to take a Workday-branded assessment and/or personality test.” Then, Workday’s screening tools use AI to evaluate candidates’ qualifications and recommend whether they should be accepted or rejected.

Race, Age, Disability Discrimination?

Mobley says his race could be identified because he graduated from an HBCU, and his age could be computed because his graduation date was listed on his resume. Further, in Mobley’s view, the assessment and personality test are likely to screen out candidates, like himself, who suffer from depression and anxiety.

Mobley asserted that he met the qualifications for the roles he applied to. Despite his qualifications, Mobley says he was “denied employment for every one of the 100-plus applications that he submitted to companies using Workday’s platform.” He listed several rejection examples in the complaint, including:

• He was working for Hewlett-Packard on a contract basis when he applied for a technical consultant position. This role allegedly had the same qualification requirements as the role he was working in. Even so, his application was rejected the following month, and
• He applied for a customer service position at 12:55 a.m., and his application was rejected less than an hour later.

He filed a lawsuit alleging Workday provided companies with algorithm-based applicant screening tools that discriminated against him and other similarly situated job applicants based on race, age and disability.

Workday filed a motion to dismiss. The court granted it with leave to amend, meaning Mobley had a chance to refile his lawsuit.

When Mobley filed the amended complaint, Workday again asked the court to dismiss the claim.

Can Vendors Commit AI Hiring Discrimination?

You might be wondering: Can a vendor be held liable for employment discrimination?

Mobley sued under Title VII, the ADEA and the ADA. All three laws prohibit discrimination by employers and also by agents of those employers.

Here, the judge decided that a reasonable jury could find that Workday was an agent of the employers that rejected Mobley. Why? Because “Workday’s customers delegate traditional hiring functions, including rejecting applicants, to the algorithmic decision-making tools provided by Workday,” the court explained.

Mobley’s complaint alleged Workday embeds AI and machine learning into its tools to “make hiring decisions,” and its software can automatically reject candidates or move candidates forward in the hiring process.

The court noted that Mobley supports this allegation with his example of receiving a job rejection in the middle of the night within an hour of applying. In the court’s view, this plausibly alleges that the rejection “decision was automated” rather than being made with human oversight.

Because of Workday’s alleged role in which “applicants can ‘get their foot in the door’ for an interview, Workday’s tools are engaged in conduct that is at the heart of equal access to employment opportunities,” the court opined.

Court Makes Key Distinction: It’s the AI

Importantly, the court explained that not every software vendor could be deemed an agent of an employer – and thus potentially held liable for employment discrimination.

For instance, the court provided a fictional scenario where an employer used spreadsheet software to sort applicants by birthdate and then filtered out all candidates over the age of 40. In that case, the vendor would not be acting as an employer’s agent “because the spreadsheet is not participating” in the hiring decisions.

“By contrast, Workday does qualify as an agent,” the court explained, because its tools allegedly “perform a traditional hiring function of rejecting candidates at the screening stage and recommending who to advance to subsequent stages, through the use of artificial intelligence and machine learning.”

Why Court Allows Claims to Proceed

After deciding that Workday was an agent of its employer-clients, the court turned to Mobley’s disparate impact claims.

To state prima facie claims of disparate impact, Mobley had to:

• Show a significant disparate impact on a protected class or group
• Identify the specific employment practices at issue, and
• Show a causal link between the challenged practices and the disparate impact.

Mobley made this showing, the court determined, as he claimed that he unsuccessfully applied to more than 100 positions for which he was qualified; he identified Workday’s use of AI decision-making tools to screen applicants as the employment practice that was the common denominator; and he plausibly alleged a link between the two.

In the court’s view, “the sheer number of rejections and the timing of [the after-hours rejections]” could convince a reasonable jury that Workday’s screening algorithms “were automatically rejecting Mobley’s applications based on a factor other than his qualifications, such as a protected trait.”

As a result, the court denied Workday’s motion to dismiss the disparate impact claims under Title VII, the ADEA and the ADA. The case continues.

In an email to HRMorning, a spokesperson for Workday said the company was optimistic about the case.

“We’re pleased that the majority of claims in this case were dismissed, and we’re confident that the remaining allegations will be easily refuted as we move to the next phase where we’ll have an opportunity to directly challenge their accuracy,” the spokesperson said.

We’ll keep you posted.

Mobley v. Workday, Inc., No. 23-cv-00770-RFL, 2024 U.S. LEXIS 126336 (N.D. Cal. 7/12/24).