Facts
Derek Mobley alleged that Workday’s algorithm-based applicant screening tools, which embed AI and machine learning and draw on personality tests, discriminated against him on the basis of race, age and disability. Since 2017 he had applied for more than 100 positions at companies using Workday’s platform and had been rejected every time; one application submitted at 12:55 a.m. was rejected less than an hour later. He sued Workday itself, not the employers, under Title VII, Section 1981 (42 U.S.C. § 1981), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA) and California law. Workday argued that as a software vendor it was not covered by these statutes.
Question
These statutes apply to employers, employment agencies and, through the definition of employer, “any agent” of an employer. The question was whether a vendor supplying screening software could be directly liable, either as an employment agency or as an agent to which employers had delegated hiring functions. The court also had to assess whether the complaint plausibly alleged intentional discrimination and disparate impact discrimination.
Decision
Judge Rita F. Lin held that Workday could be liable as an agent of employers. The complaint plausibly alleged that employers had delegated a traditional hiring function, screening and rejecting applicants, to Workday’s tools. The court found nothing in the statutes that distinguishes delegation to a human agent from delegation to an automated one, and warned that drawing such a distinction could gut anti-discrimination law in the modern era. The employment-agency theory and the intentional discrimination claims under Title VII, the ADEA and Section 1981 were dismissed without leave to amend, the California claim was dismissed with leave to amend, and the disparate impact claims proceeded. The court did not decide whether Workday could also be liable as an indirect employer.
Why it matters
The ruling is a leading U.S. authority for the proposition that providers of AI hiring tools, as well as the employers that use them, can face direct liability for discriminatory outcomes. The test turns on the function delegated, so the reasoning extends to other automated employment decisions such as promotion, pay or benefits. The case continues, and the court later granted preliminary certification of a nationwide collective for the age discrimination claim.
Related stages
On May 16, 2025 the court granted preliminary certification of a nationwide ADEA collective of applicants aged 40 and over (Dkt. 128). On September 14, 2026 a motion for Rule 23 class certification was filed (Dkt. 418); the hearing is set for March 9, 2027. The case remains pending.