Mobley v. Workday, Inc. alleged that Workday’s AI screening tools discriminate against job seekers based on age, race, and disability. The suit was filed in 2024 in the U.S. District Court of California by Derek Mobley, a Black disabled man over 40, who claimed Workday’s algorithms continually screened him out as he applied for more than 100 positions on the platform. Incidentally, his email that he applied from was a hotmail address, which was a major player in the 1990s.
The case started as an AI discrimination case as Mobley claimed that every resume was rejected by the Workday system, some at one or two in the morning, based on artificial intelligence tools embedded in Workday. Now, according to new filings with Mobley's case, he and four opt-in plaintiffs claimed to have submitted hundreds of applications to various employers that use Workday to screen applicants. Mobley and the others claimed that despite having the required qualifications, each application was denied, sometimes within hours of submission and late at night, demonstrating that no human was reviewing the resumes.
Initially, the case raised several important questions. It was unclear whether the AI system itself was rejecting Mobley's applications, whether the decisions were made by Workday, or by the employers using Workday's applicant tracking system. It was also unknown whether Mobley submitted the same resume for every position or tailored each resume to the specific job posting. As of this writing, none of these questions have been definitively answered. If Mobley used the same resume for each application, that alone could explain some of the rejections. However, the more significant issue is that many of the rejections reportedly occurred at 1:00 or 2:00 a.m., suggesting there may have been little or no human oversight of those decisions.
Further, there was no information as to how the AI was learning. It could be that the Hotmail email address represented an older candidate and as such was being screened out. From an AI discrimination case, the complaint was amended to bring an age discrimination case. In fact, the complaint was amended to include race, gender, and age under California Fair Employment and Housing Act (FEHA). Because of the amended complaint, Workday asked the court to dismiss claims brought under California law, saying FEHA should not apply to the hiring decisions of out-of-state employers and applicants. The company’s lawyers argued that enforcing this would effectively allow California law to supersede that of other states, just because a company used their platform.
But the judge disagreed, saying FEHA does apply, and in fact, Workday is directly liable for its “own engagement in FEHA-regulated activities on the employer’s behalf.” Holding businesses liable for “their own discriminatory conduct” is within the scope and purposes of FEHA and consistent with public policy. This interpretation may be stretch of reasoning and could be overturned by the U.S. 9th Circuit Court of Appeals. Essentially, a California-domiciled AI hiring-tool vendor may face FEHA liability for discriminatory outcomes nationwide, even if the nondomiciled employer is not subject to California law.
Currently, the judge allowed the case to proceed on key FEHA and ADA theories, including a disability claim tied to so-called proxy indicators, such as employment gaps. HR professionals need to recognize this important detail because it points to familiar screening indicators that may carry legal risk. Further, even though the history of the age discrimination case showed that Mobley’s lawyers dropped the ball in the discovery request, the judge wanted the case to continue.
The ruling may also lead to retroactive liability under California’s new AI law, which should be overturned. Eventually, this case will be a test case for how employment law applies when software helps make candidate selections. The long and short of it: be careful using AI in candidate screenings of any kind. Inherent bias in the learning materials for the AI tool may resonate with the AI tool leading to possible discriminatory actions, especially age discrimination. Make sure there is human intervention in all stages of the process and that the use of AI is transparent to all, including job applicants. If there is a need for any sign-offs, make sure that they are prepared and readily available to reduce potential liability.
Source: HR Executive 7/24/26, 6/24/26, Computerworld 6/17/26