A judge in San Francisco has given the green light to move forward with a proposed class action lawsuit, in a case described as the first to broadly target the algorithms behind AI-powered screening software. A U.S. federal judge has ruled that Workday must address allegations that its artificial intelligence-powered hiring software screened out job candidates at other companies in ways that allegedly violate California law and federal disability discrimination laws.
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The ruling, by U.S. District Judge Rita Lynn in San Francisco, keeps alive a case that has been a test of whether the vendors behind algorithmic hiring tools can be held liable for the actions of those tools.
Lin rejected Workday’s argument that California’s anti-discrimination laws shouldn’t apply to it when its software screens out-of-state candidates applying for jobs elsewhere. That jurisdictional point was important to the company because much of its defense rests on the idea that it simply provides software and doesn’t do the hiring itself, in California or anywhere else.
The case is Mobley v. Workday, a proposed class action lawsuit first filed in 2023 by lead plaintiff Derek Mobley, who is over 40, African American, and has a disability. It is described as the first of its kind to broadly target the decision-making algorithms behind AI screening software, rather than the behavior of any individual employer who used it. Mobley claims he was rejected from dozens of jobs that were channeled through Workday’s platform.
Lin's decision was not a clear victory for the plaintiffs. She dismissed a claim that the software discriminated against Asian-American applicants, while allowing separate claims that the software disadvantaged black applicants, women, and people over 40 to proceed.
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The surviving allegations remain allegations that the plaintiffs still have to prove. The decision only determines that they can be supported, not that they are true.
The case had already cleared a significant hurdle. The court had previously allowed it to proceed as a class action lawsuit covering candidates aged 40 and older who were rejected through Workday’s platform from September 24, 2020 onwards, a window that potentially includes a very large number of rejected candidates. The latest ruling broadens the legal theories that can now be tested at trial.
Workday completely denies the claims. The company says they are false, that its AI hiring tools “do not make hiring decisions in California or anywhere else,” and that the technology “only looks at job qualifications, not protected characteristics like race, age, or disability.”
It adds that it rigorously tests its products under a Responsible AI program, a defense that, if valid, would create a clear line between the vendor and the employers who shape and act on its software. That line is precisely what is now being challenged. If a screening tool produces biased results, the open question is whether the company that built it can be considered, legally, an agent of the employers who use it.
The stakes go far beyond a single company. Algorithmic screening has quietly spread through corporate hiring, and an AI-on-AI hiring war has focused minds on lost jobs rather than candidates being vetted before their applications are even read by a human.
See also: Workday will lay off about 1,750 employees
A ruling that the vendor can be sued would put each of these tools under scrutiny. Scrutiny of how AI systems handle sensitive personal data has intensified in parallel. For now, the practical impact of Lin’s decision is narrow but real: Mobley v. Workday is moving forward, and the discovery phase will continue.
