A recent court decision in the case of Mobley v. Workday has established that artificial intelligence systems used for hiring can be subject to discrimination lawsuits under California’s Fair Employment and Housing Act (FEHA). The ruling expands the scope of liability for both the technology vendors that create these tools and the companies that purchase them.
The litigation began in February 2023 when a class action lawsuit was filed alleging that Workday’s AI-driven hiring platforms, specifically its Candidate Skills Match system, produced discriminatory outcomes based on race, age, and disability. The complaint asserted that the algorithm scored and ranked job applicants in a manner that violated federal statutes and California law.
The suit claimed these discriminatory effects occurred across hundreds of employer clients.
In a significant procedural development, the court conditionally certified a class of applicants aged 40 and older whose applications were processed by Workday’s AI system between September 2020 and the present. This certification allows the age discrimination claims to proceed under the Age Discrimination in Employment Act.
Additionally, the court permitted the FEHA claim to move forward, rejecting Workday’s argument that the law should not apply to its conduct.
The court’s analysis focused on whether Workday, as a California-based vendor, could be held liable for screening activities performed for employers outside the state. The judge rejected the company’s defense that its liability should depend solely on whether its employer-customers were also liable.
Instead, the court determined that Workday acted as an agent engaging in screening on behalf of its clients, making it directly subject to FEHA regulations regardless of where the employer or applicant was located.
