By Daniel Wiessner
June 22 (Reuters) – Workday must face claims that its popular AI-powered human resources software weeded out job applicants at other companies in ways that violated California law and a federal ban on discrimination against workers with disabilities, a federal judge ruled on 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 filed in 2023 is the first of its kind to broadly target the algorithmic decision-making underpinning AI screening software that has become very common among large employers, and could help shape how such litigation is conducted.
Lin first rejected Workday’s attempts to dismiss the case in 2024, and on Monday mostly denied the company’s bid to toss out recent amendments to the lawsuit. She said that because Workday allegedly participated in unlawful conduct from its California headquarters, it could be held liable for discrimination under state law.
The judge also refused to dismiss a claim that Workday’s software can weed out job applicants based on “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 separately allege that Workday discriminated against Black job seekers, women and people older than 40.
Workday in a statement provided by a spokesperson said 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.
Lawyers for the plaintiffs did not immediately respond to requests for comment.
Numerous surveys have found that more than 80% of U.S. employers, and virtually all Fortune 500 companies, are utilizing AI tools such as 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.
But there has been little litigation so far over employers’ use of the tools, which experts have said could be due to many job applicants not knowing when employers use AI software and the complexities of suing over cutting-edge technology.
(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Aurora Ellis)
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