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Workday tells investors its AI hiring suit could reach customers

Workday's quarterly report says the plaintiffs in its AI hiring-bias case may also pursue its customers. Recruiting teams can test their screening step now.

WrenAI editor
· 3 min read
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Workday, whose HR software is used by more than 11,500 customers, told investors in its [quarterly report](https://www.sec.gov/Archives/edgar/data/1327811/000132781126000044/wday-20260731.htm) of 27 August 2026 that it is "defending against a lawsuit alleging that certain of our AI-related products and services enable discrimination". It added that such cases can be disruptive "to our operations and customers (particularly where, as in the present litigation, the plaintiff may seek to also litigate against certain of Workday's customers)". The same sentence is in its [annual report](https://www.sec.gov/Archives/edgar/data/1327811/000132781126000014/wday-20260131.htm) of 6 March.

Workday says in the filing that the claims "lack merit" and that "the majority of the claims have been dismissed". It does not name the case; HR Dive's reports on Mobley v. Workday, in the federal court for the Northern District of California, describe the one that fits.

Where the case stands

  • February 2023: an applicant sued, saying more than 100 applications to companies that recruit through Workday had been rejected, often at once or in the middle of the night, and alleging bias by age, race and disability ([HR Dive](https://www.hrdive.com/news/workday-california-AI-bias-lawsuit-feha/823555/)).
  • May 2025: Judge Rita Lin let the age claim go ahead as a collective action, a group case that people opt into. It covers applicants aged 40 and over denied recommendations through Workday's platform from 24 September 2020 to the present ([HR Dive](https://www.hrdive.com/news/workday-ai-bias-lawsuit-class-collective-action/748518/)). Workday had said the group could run to "hundreds of millions" of people.
  • August 2025: the judge had Workday give an outside administrator a list of employers that enabled its AI features (Candidate Skills Match and HiredScore's Spotlight and Fetch) to check who may join, rather than publish its full customer list ([HR Dive](https://www.hrdive.com/news/judge-allows-workday-avoid-disclosing-full-customer-list/758878/)).
  • 6 March 2026: the judge held that job applicants, not only employees, can bring age claims based on disparate impact, meaning a practice that is neutral on paper but screens out a protected group ([HR Dive](https://www.hrdive.com/news/workday-partial-loss-judge-refuses-claims-dismissal/814227/)).
  • 22 June 2026: she refused to dismiss claims under California's Fair Employment and Housing Act, including for applicants outside California, because Workday designs and runs the tools from its California headquarters. A disability claim tied to screening on medical leave and gaps in employment also goes ahead. She threw out a race-based disparate impact claim and a claim that Workday is liable as an employer ([HR Dive](https://www.hrdive.com/news/workday-california-AI-bias-lawsuit-feha/823555/)).

These rulings decide what may be argued. No court has found that the tools discriminated, and these sources give no later ruling, trial date or damages figure.

What Workday says

"The claims in the suit are false. Workday's AI recruiting tools don't make hiring decisions in California or anywhere else. Our customers maintain full control of their hiring processes and our tools are designed with human oversight at their core," a spokesperson told HR Dive in June. The company said it tests its products "to confirm our tools do not harm protected groups"; the sources read here carry no test results.

What this means for an employer

Workday's defence is that the customer controls hiring; its filing says the plaintiffs may pursue customers. The sources name no customer that has been sued and do not say what Workday's contracts promise if one is.

To prove disparate impact under the age law, plaintiffs must show a significant disparity for the protected group, identify the practice and show the practice caused it, the court said, [according to HR Dive](https://www.hrdive.com/news/workday-ai-bias-lawsuit-class-collective-action/748518/). An employer can measure the first of those in its own applicant data.

The people

The sources do not say how recruiters at Workday's customers use the scores, how often a person overrides them, or who reviews rejected applications.

What to do if you hire through Workday

  • Ask your Workday administrator which AI features are on in recruiting (Candidate Skills Match, HiredScore Spotlight, Fetch), since what date, and whether any application is rejected or ranked without a recruiter opening it.
  • Have your people-analytics lead and employment counsel compare the share of applicants aged 40 and over who pass the screening step with the share of younger applicants, job family by job family, and keep the workings.
  • Ask your Workday account manager in writing for the bias-test results it cites, and ask counsel to read the contract for who pays if a hiring claim names you.
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Workday's quarterly report of 27 August 2026 says the plaintiffs suing over its AI applicant screening may also pursue Workday's customers, and HR Dive reports a judge has let an age claim go ahead as a group case for applicants aged 40 and over. If we screen applicants with Workday's AI features, we should compare pass rates by age at that step now and check what our contract says about claims.

Questions to ask

  1. Which Workday AI recruiting features are enabled for us, since when, and on which requisitions?
  2. Is any application rejected or ranked lower without a recruiter opening it, and how often do recruiters override the score?
  3. What bias testing has Workday run on these features, on whose data, and can we see the results by age and disability?
  4. If a hiring claim names us, what does our Workday contract say about who pays for the defence and any award?
  5. Were we on the list of employers Workday gave the case administrator in 2025?

The arithmetic

Pass rate at screening = applicants passed to a recruiter ÷ applicants screened. Compare: pass rate for applicants aged 40 and over ÷ pass rate for applicants under 40, for each job family.

The sources give no pass rates for any employer, so the sum cannot be worked from them; the inputs are your own applicant records. The court's test, as HR Dive reports it, needs a significant disparity for the protected group, an identified practice and a causal link between the two.

Questions this article answers

Can employers that use Workday be sued in the Workday AI bias case?

Workday's quarterly report of 27 August 2026 says the plaintiff "may seek to also litigate against certain of Workday's customers". The sources read here name no customer that has been sued.

What is Mobley v. Workday about?

Job applicants allege that Workday's AI applicant-screening tools rejected them because of age, race and disability. HR Dive reports the case was filed in February 2023 and that a judge let the age claim proceed as a collective action in May 2025. Workday says the claims are false.

Who is covered by the Workday collective action?

According to HR Dive, applicants aged 40 and over who were denied employment recommendations through Workday's job application platform from 24 September 2020 to the present. People must opt in to join.

Has a court found that Workday's AI discriminated?

No. The rulings reported up to 22 June 2026 decide which claims may proceed, not whether the tools discriminated. Workday told investors the majority of the claims have been dismissed.

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