AI Bias Case Against Workday Moves Forward, Heightening Employer Liability Risk with Recruitment Tools

A high-profile lawsuit challenging algorithmic hiring practices is moving forward in Mobley v. Workday, Inc., a case with growing implications for employers using AI-driven recruiting tools.

Recently, a federal judge granted conditional certification of a nationwide collective action under the Age Discrimination in Employment Act, allowing claims to proceed on behalf of older applicants allegedly rejected by Workday’s screening software. The case reportedly includes “hundreds of millions” of potential plaintiffs.

The court has held that Workday could be liable under federal anti-discrimination laws if its AI tools functioned as “agents” of the employers using them. The case will now move into discovery, likely offering further insight into how automated screening systems are built and deployed.

For employers, Mobley underscores the need to proactively evaluate AI tools for disparate impact on protected groups. Courts have long held employers accountable when third-party vendors mishandle background checks (under the Fair Credit Reporting Act) or leave administration (under the Family and Medical Leave Act), for example, and the same principle is taking shape with algorithmic hiring.

Delegating a function doesn’t eliminate liability—and Mobley may be just the beginning, as similar claims are likely to be filed against individual employers. To mitigate risk, employers should:

• audit AI-driven tools for bias,
• train HR professionals and managers,
• implement appropriate policies, and
• review contracts with vendors to ensure proper risk-shifting and compliance.

Frantz Ward will continue monitoring the case as it develops. If you have any questions on the case, or any other issues, please do not hesitate to contact Ryan T. Smith or another member of the Frantz Ward’s Labor and Employment Practice Group.