Every employer using AI in hiring just lost the ability to say, "that's the vendor's problem," and every vendor just lost the ability to say, "we only make the software." The rulings in Mobley v. Workday, most recently on June 22, 2026, have kept discrimination claims moving across race, sex, age, and disability, built on a foundation the court laid earlier: an AI tool that screens candidates on your behalf can be treated as your agent, and nobody in that chain is insulated.
Here's what happened, what it means, and what to do about it.
What Is Mobley v. Workday?
Mobley v. Workday is a federal class and collective action in the Northern District of California challenging the AI-driven applicant screening tools Workday provides to thousands of employers. Plaintiff Derek Mobley alleges he was rejected from more than 100 jobs by employers using Workday's tools, citing systematic discrimination based on race, age, and disability. He isn't challenging a single bad decision; he's challenging the system itself.
The plaintiffs argue that tools which rank, evaluate, and recommend candidates produce disparate impact by penalizing data points like employment gaps, which correlate with protected characteristics such as disability-related medical leave or age. Claims span Title VII, the ADEA, the ADA, and California's FEHA. The short version of how AI hiring bias and compliance intersect: algorithms trained on historical data can reproduce the very biases anti-discrimination law was designed to prevent.
The Key Rulings So Far
July 2024: Workday treated as an agent, not a neutral vendor. Judge Rita Lin held that a vendor performing core hiring functions on your behalf (screening, ranking, and recommending candidates) can be treated as an extension of your organization, directly liable under Title VII, the ADEA, and the ADA. Your own liability doesn't disappear because a third party built the tool.
May 2025: conditional collective certification. The ADEA claims were conditionally certified as a collective, reaching hiring decisions made through Workday's AI systems going back to 2020.
July 2025: the customer list order. Workday was ordered to identify the employers who had enabled its HiredScore AI screening features, with the list going to a third-party administrator to notify prospective collective members. Employers using these features have been pulled into the litigation orbit, and their hiring outcomes can surface in a lawsuit they never chose to join.
Early 2026: the ADEA covers applicants. The court rejected Workday's argument that disparate-impact protections cover only current employees, confirming that applicants aged 40 and older can challenge AI screening tools.
June 22, 2026: the case's reach confirmed across protected groups. The court granted in part and denied in part Workday's latest motion to dismiss; the California FEHA claims and a proxy-discrimination disability claim survived. With the amended complaint's sex-based claims, the case now spans race, sex, age, and disability.
To be precise: none of this is a finding of liability. It is the court repeatedly refusing to let Workday out, and each refusal reinforces the framework that matters to you, on top of the AI hiring laws that could catch your company off guard.
Why This Matters for Every Employer Using AI Screening
You cannot outsource discrimination liability to a vendor. When you delegate core hiring functions to an AI tool, courts can treat that tool as an extension of your decision-making, and both you and the vendor can face claims if the system creates disparate impact.
The discovery implications deserve attention: because Workday had to identify its AI customers, employers using these tools can have applicant flows, selection rates, and rejection patterns drawn into litigation without being named defendants. And the theory reaches past resume screening to automated scoring, video interview analysis, and algorithmic background check adjudication. If an algorithm makes or influences a hiring decision, it's covered, and an AI hiring score can also qualify as a consumer report, layering FCRA obligations on top.
The same logic applies to AI-assisted background screening. Automated adjudication matrices and "fit" scores built on background data can produce disparate impact exactly as the Mobley algorithms allegedly do: arrest records skew by race, some conviction types track socioeconomic patterns, and frequent job changes can disadvantage older workers or those needing intermittent leave. Individualized assessments are already an expectation under EEOC enforcement guidance; Mobley raises the stakes for anyone letting an algorithm make the call.
10 Steps Employers Should Take Now
- Inventory all AI use in hiring and screening, from sourcing through background check adjudication. You can't govern what you haven't identified.
- Review contracts with AI vendors: compliance responsibilities, documentation of model features and training data, regular bias testing, and your right to audit.
- Implement formal AI governance: written policies on when AI may be used, which decisions require human review, and how fairness is evaluated.
- Conduct disparate impact analyses, testing selection rates across protected groups with established methods like the four-fifths rule, and investigate any disparities.
- Scrutinize model inputs for proxies: graduation dates, employment gaps, medical-related leave, and tenure patterns all carry risk unless clearly job-related and validated.
- Preserve human judgment for adverse decisions, with FCRA-compliant adverse action procedures even when AI suggests the outcome.
- Provide accommodation paths, offering alternatives to AI-heavy assessments for applicants with disabilities.
- Strengthen audit trails: log which tools touched each decision, what triggered rejections, and any human overrides with reasons.
- Train HR and hiring managers that algorithmic outputs are recommendations, not mandates, and to escalate patterns that look problematic.
- Monitor developments: track the Mobley case and emerging state AI hiring laws (Texas, for example, prohibits deploying AI systems with intent to discriminate from January 2026). Check our state-by-state compliance guide for the rules where you hire.
How KRESS Helps Employers Stay Ahead
KRESS is a background screening company built around compliance. We automate what should be automated and keep human judgment where it matters most, which is the balance Mobley puts under scrutiny. Our services span criminal background checks, employment and education verification, drug testing, and continuous monitoring, alongside compliance audits and training to help keep your screening program current as the rules change. As the law around automated hiring evolves, a screening partner that treats compliance as core, rather than an afterthought, is worth having in your corner.
Rethinking how automation touches your hiring? Talk to the KRESS compliance team. We'll help you review your screening process and keep it fair, current, and defensible.
Frequently Asked Questions
Can my company be sued for discrimination caused by an AI hiring tool we purchased from a vendor?
Yes. Using a vendor's AI tool doesn't shield employers from liability, and Mobley establishes that the vendor can face claims too: courts can treat an AI screening tool as an agent of the employer.
Does the Mobley case apply to background check adjudication, or only to resume screening?
The legal theory applies to any AI-driven hiring or screening decision, including automated adjudication matrices used in background checks. If automated rules produce disparate impact, the framework applies wherever the algorithm operates.
Are job applicants protected under the ADEA?
Yes. The court rejected Workday's argument that the ADEA protects only current employees, confirming that applicants aged 40 and older can bring claims.
Has Workday been found liable?
No. The rulings to date determine which claims can proceed and under which theories; they are not findings of liability. What matters for employers is the framework the case has confirmed: vendor tools can carry agent liability, applicants are protected, and customer hiring data can be drawn into discovery.
Not sure where AI touches your screening process, or whether your adjudication criteria could create disparate impact? Talk to the KRESS compliance team. We'll help you identify gaps and build a defensible, fair screening workflow.