October 6, 2026
Workday’s lawsuit shows us how vendors become liable for disparate impact claims
Derek Mobley sued Workday over a pattern of rejections from alleged automated screening. The court has allowed this case to proceed. We discuss where the case is, how mandated bias testing fell short, and how upcoming ADMT laws would have changed it.
The complaint and case status
Derek L. Mobley is an African American man who graduated from Morehouse College with a bachelor’s in finance in 1995 and later earned an associate’s in systems administration from ITT Technical Institute. He is over forty and, according to his complaint, suffers from anxiety and depression. Since 2017, Mobley applied to over a hundred positions1 at companies that use Workday’s hiring platform, software used to collect and screen applications, and was rejected by all of them, often within hours of applying. In February 2023, Mobley filed a class action lawsuit against Workday, alleging that the company offers an unlawful automated applicant screening system that “disproportionally disqualifies African-Americans, individuals over the age of forty, and individuals with disabilities” from securing employment opportunities2. Mobley’s evidence was centered around timing: fast, off-hour rejections suggested to him that an automated screening tool, not a human recruiter, was reading his application and disqualifying him. He pointed to details in his applications that could stand in for protected traits, including a 1995 graduation from a Historically Black College or University (HBCU), signaling both his race and his age. Many positions required him to complete Workday-branded assessments and personality tests, which he argues tend to reveal mental health conditions and produce lower scores for people with anxiety or depression.
Workday moved to dismiss the case, arguing that it is a software service where employers configure their tools and make all decisions, excluding it from anti-discrimination laws. In January 2024, Judge Rita Lin agreed and dismissed the case on the basis that the court was unable to conclude that Workday was involved enough to be considered an “employment agency3.” Moreover, Judge Lin flagged the argument for discrimination as weak: Mobley did not allege that Workday knew his race, age, or disability, did not describe the jobs he applied to or why he was qualified for them, and did not specify a practice of discrimination beyond constant rejections.
However, the court granted the plaintiffs the opportunity to refile, and in their second attempt in February 2024, the plaintiffs described Workday as an “agent” of the companies that use its services. They argued that Workday’s customers delegated the job of screening and rejecting applicants to Workday’s software, which was effectively “participating in the decision-making process.” Title VII, the ADEA, and the ADA each define an “employer” to include “any agent of” an employer, and courts have interpreted that to mean an employer cannot circumvent the law by handing a core function to another entity. That same logic appeared in the Supreme Court’s ruling on Manhart in 1978, warning that an employer cannot “avoid his responsibilities by delegating discriminatory programs to corporate shells,” and was supported by the EEOC, which said that vendors can be held liable when given the authority to perform the employer’s functions.
Workday argued that agent liability is held by the employer, and treating a software service as an agent would make its supposed role as an employment agency meaningless, but Judge Lin disagreed. The court separated the two roles: employment agencies find candidates for an employer, whereas agents carry out functions the employer would perform. What matters is the function delegated, not how the agent performs it, and the statutes do not distinguish “between delegating functions to an automated agent versus a live human one.” Workday’s tools, as alleged, perform “a traditional hiring function of rejecting candidates at the screening stage and recommending who to advance.” Drawing a line between software and human decisionmakers “would potentially gut anti-discrimination laws in the modern era,” because employers could delegate hiring, promotion, and pay decisions to algorithms and leave applicants with no one to sue. Importantly, she specified that only those involved in the decision-making process are agents of the employer. The second suit, allowed to proceed, was only on the basis of disparate impact4, since nothing suggested that Workday intentionally discriminated.
In May 2025, the court certified a nationwide collective under the ADEA allowing any applicant who used Workday or HiredScore, a 2024 Workday acquisition, since 2020 to opt in if they were forty or over and not recommended to the position. This bid would be expanded from three new plaintiffs bringing sex discrimination claims and claims under California’s Fair Employment and Housing Act (FEHA)5. In total, around 14,000 people opted in to the collective before the window closed in March 2026. Separately, the plaintiffs moved to certify a class6 including all applicants who were Black, women, over forty, or disabled and were scored or ranked by Workday’s service. So far, every ruling has been about who can be sued, who it covers, and on what grounds. No determination has been made on whether Workday’s tools discriminate.
Mandated bias testing
New York City’s Local Law 144, passed in December 2021 and enforced since July 2023, regulates automated hiring tools and covers any “automated employment decision tool” that “substantially assists or replaces” the decision to hire or promote someone in New York City. Employers using such tools must (1) have them externally audited for bias annually, (2) publish the results, and (3) notify the city. The audit compares selection rates across sex and race to check if certain groups are selected more than others, but it can be interpreted in multiple ways7. Had Mobley applied for a job in New York City, he would have received notice that an automated tool was in use and could have looked up the published impact ratios for the tool, but he could not sue a company for lacking transparency8.
Workday produced historical applicant data and the pre-acquisition audit HiredScore ran in 2023 but refused to produce the rest of its bias testing. It held the position that its lawyers had curated the tests for the purpose of legal advice and limited access to only those legally involved. Furthermore, it argued that if it were held to be an agent, LL144 and similar regulations did not apply to it. The plaintiffs did not address whether LL144 applied to agents but argued that Workday’s internal bias tests could not be withheld since privilege is meant for communications instead of data and code, Workday’s lawyers were acting in a business role, and Workday had publicly advertised bias-testing its products. The magistrate judge sided with Workday, confirming that tests curated by attorneys are privileged legal advice and discussing the existence of a testing program is not the same as relying on its results. The same order held that applicant data stored by Workday’s customers is not in Workday’s control9 and it cannot be ordered to produce it. Workday eventually produced three internal bias evaluation reports while continuing to assert privilege over the data behind them, but whether producing the reports waives privilege over the underlying data is still undecided.
How would ADMT laws change the case
Three new laws surrounding automated decision-making technology (ADMT) could apply to a case like this. First, California’s civil rights regulations on automated-decision systems, in effect since October 1, 2025, define an employer’s agent to include anyone who performs applicant screening or hiring on the employer’s behalf, “in whole or in part,” and treat that agent as an employer under FEHA. Employers and their agents are required to keep all relevant data for four years, including anti-bias testing, or lack thereof. This regulation mirrors Judge Lin’s 2024 ruling, and in this case, there would have been no argument over whether a software service is covered under anti-discrimination law.
The second set of rules arrives on January 1, 2027: California’s ADMT regulations under the CCPA and Colorado’s ADMT Act10. Both laws require employers to provide a combination of notices, explanations, possible human intervention, and recordkeeping when using automated tools for significant decisions, including hiring. However, the two states differ in what they consider to be an automated decision. California checks if a qualified human11 stood between the ADMT’s output and the decision’s outcome, considering the decision to be automated otherwise. Whereas, under Colorado, any score, ranking, or classification that “materially influences” a consequential decision counts as automated decision-making, regardless of human involvement.
Mobley had to infer automation from the speed and timing of his rejections and develop an argument placing Workday as the agent of an employer. ADMT laws create clear guidelines for what counts as automated decision-making and assign the liability to the employer. This aligns with Workday’s core argument that all hiring decisions were made by its customers, and any vendor in a similar situation will take the same stance. None of Workday’s customers have been brought into this case, but the claims alleged against Workday apply to both agent and employer. Chicory is the platform to help employers meet the requirements of ADMT laws, regardless of what vendors they use. It integrates with external services to keep all the records, automatically sends notices and explanations, and manages human intervention.
- His original 2023 complaint put the count at 80 to 100 applications since 2018; the amended complaint raised it to over 100 since 2017.
- Filed under Title VII, the ADEA, the ADA, and Section 1981.
- A business that finds workers for employers or job openings for workers.
- A practice that is neutral on its face, and applied without any intent to discriminate, is still unlawful if it falls harder on a protected group and cannot be justified by business necessity.
- CA FEHA would be granted to individuals nationally, not just California residents.
- Unlike a collective, a class would include everyone who fits the requirements unless they opt out.
- The plaintiffs, after receiving one of Workday’s LL144-style bias reports deemed to show “no evidence of disparate impact,” recalculated to check if the gaps between selection rates were larger than chance would allow and alleged statistically significant disparities against Black applicants and women.
- NYC LL144 is for transparency; violations are only for failing to audit, publish, or notify, with no private right of action.
- Except for Workday, who uses their own service and was ordered to produce their EEO-1 and OFCCP records.
- We have an in-depth summary of both regulations.
- A “qualified human” is one who (1) knows how to interpret ADMT results, (2) reviews results, and (3) has the authority to overturn results.