Workday is facing a lawsuit that claims its popular AI-powered human resources software has shown hiring bias in ways that violate California law and a federal ban on discrimination against workers with disabilities, a federal judge ruled Monday.
U.S. District Judge Rita Lin in San Francisco rejected California-based Workday’s claim that the state’s anti-discrimination laws do not apply when it screens people based outside California who are applying for jobs in other states and countries.
The proposed class action lawsuit was filed in 2023. It was the first of its kind to target AI screening software’s algorithmic decision-making. Lin first rejected Workday’s attempts to dismiss the case first in 2024, and then on Monday, saying that since the company allegedly participated in unlawful conduct from its California headquarters, it could be held liable for discrimination under state law.
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She also refused to dismiss the claim that Workday’s software can weed out “proxy indicators” of disabilities and illness such as gaps in someone’s employment history, in violation of the federal Americans with Disabilities Act.
Lin dismissed a claim that Workday’s software discriminated against Asian American job applicants, saying the plaintiffs did not follow the proper procedure to add it to the lawsuit. The plaintiffs also alleged that Workday discriminated against Black job seekers, women and people older than 40.
Workday said in a statement that the claims in the lawsuit are false and that the company’s AI recruiting tools do not make hiring decisions “in California or anywhere else.” “Our technology looks only at job qualifications, not protected traits like race, age, or disability. We rigorously test our products as part of our Responsible AI program to confirm our tools do not harm protected groups,” the company said.
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According to surveys, more than 80% of U.S. employers, and virtually all Fortune 500 companies, are utilizing AI tools like those made by Workday in the hiring process. Government agencies and worker advocates have expressed concerns that AI tools can discriminate against job applicants when they are built using data that reflects existing biases.
However, so far, there hasn’t been much litigation over employers’ use of those tools. Experts have said this could be due to many job applicants not knowing when employers use AI software and the complexities of suing over cutting-edge technology.