A federal judge in San Francisco on Monday determined that Workday will face a proposed class action accusing its AI-based human resources software of improperly screening out job applicants in ways that may contravene California law and the federal Americans with Disabilities Act (ADA).
U.S. District Judge Rita Lin denied Workday’s argument that California’s anti-discrimination statutes do not reach software developed and operated from the state when the screening affects applicants located in other states or abroad. The suit, filed in 2023, is notable for taking broad aim at the algorithmic decision-making that underlies AI hiring platforms that have become common among large employers.
Judge Lin had previously rejected an initial bid by Workday to dismiss the lawsuit in 2024. In Monday’s ruling she largely refused the company’s latest attempt to strike out recent amendments to the complaint. Lin said the amended allegations, which point to conduct originating from Workday’s California headquarters, are sufficient to permit claims under state anti-discrimination law to proceed.
The court also declined to dismiss a central federal claim contending that Workday’s software can exclude applicants based on "proxy indicators" of disability or illness - for example, gaps in employment history - in violation of the ADA. That allegation argues the technology effectively infers health conditions or disabilities from patterns in a candidate’s record and screens them out as a result.
At the same time, Judge Lin dismissed a proposed claim that Workday’s software discriminated against Asian American applicants because the plaintiffs did not follow the appropriate procedural steps to add that theory to the lawsuit. The complaint separately alleges discrimination against other protected groups including Black job seekers, women and individuals over 40.
Workday and counsel for the plaintiffs did not immediately provide comments in response to requests.
The case arrives amid widespread adoption of AI hiring tools. The complaint notes numerous surveys finding more than 80% of U.S. employers - and nearly all Fortune 500 companies - use AI-powered tools similar to those offered by Workday in hiring workflows. Regulators and worker advocates have raised concerns that tools trained on historical hiring data may reproduce or amplify existing biases.
Despite those concerns, litigation against employers for using AI in hiring has been limited to date. Observers cited in the filings and related commentary have attributed the relative scarcity of lawsuits to two practical challenges: many job applicants are unaware when employers use AI screening, and pursuing claims against novel technology involves legal and technical complexity.
Legal significance - The survival of these claims at the pleading stage keeps alive a test case over how traditional civil-rights statutes apply to contemporary algorithmic hiring systems and could influence future enforcement and litigation strategies.