May 16, 2025
Ruh-Roh! AI Oops?
Forbes magazine described Workday as, “a provider of cloud-based software that specializes in applications for financial management, enterprise resource planning (ERP) and human capital management (HCM)…a pioneer in HR software as a service (SaaS).”
On May 16th, a class action lawsuit was filed against Workday alleging that Workday’s artificial intelligence (“AI”)-based applicant recommendation system discriminated against job applicants on the basis of race, age, and disability. The primary claim is that applicants over the age of forty allege that they applied for hundreds of jobs via Workday and have been rejected almost every time without an interview because of age discrimination in Workday’s AI recommendation system.
The judge granted the plaintiff’s request for preliminary certification of a collective action on the age discrimination claim, which would allow him to notify similarly situated individuals of the lawsuit and provide them an opportunity to opt-in to having their claims heard on a collective basis.
How many? Workday estimates it is the “hundreds of millions.”
Implications for employers? If your company is a Workday client, talk to your company’s legal counsel. Review the contract you have with them. There is already precedent that tells us that employers may be jointly liable for discrimination engaged in by their third-party vendors. This may pit the vendor against the client-employer. Even this judge has already speculated, “if Workday intends to argue that any observable disparate impact is the result of employer-driven bias and not attributable to Workday.”
Employers’ use of AI is growing. So may be the associated risks. If you missed June’s webcast, “AI in HR Practices,” check it out here. We cover some of the legal compliance issues, challenges and practice tips for HR pros and small business using AI in employment practices. How this case plays out may have interesting implications for employer/vendor relationships.
