Workday must face claims over AI hiring software bias

Investing.com -- Workday Inc must face claims that its artificial intelligence-powered human resources software screened out job applicants in ways that violated California law and federal disability discrimination rules, a federal judge ruled Monday.

U.S. District Judge Rita Lin in San Francisco rejected Workday's argument that California's anti-discrimination laws do not apply when it screens applicants based outside California who are applying for jobs in other states and countries.

The proposed class action, filed in 2023, is the first case to broadly challenge the algorithmic decision-making behind AI screening software that has become common among large employers.

Lin first denied Workday's attempts to dismiss the case in 2024. Monday's ruling mostly rejected the company's effort to dismiss recent amendments to the lawsuit. The judge 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 declined to dismiss a claim that Workday's software can screen out job applicants based on proxy indicators of disabilities and illness, such as gaps in 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 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.

More than 80% of U.S. employers and virtually all Fortune 500 companies are using AI tools such as those made by Workday in the hiring process, according to surveys. Government agencies and worker advocates have raised concerns that AI tools can discriminate against job applicants when they are built using data that reflects existing biases.

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