A software giant that powers hiring decisions for thousands of American employers is asking a federal judge to shield itself from California civil rights law — even though its AI screening tools operate from California headquarters.
Workday, based in Pleasanton, California, argued in San Francisco federal court Monday that its artificial intelligence hiring software shouldn’t face liability under California’s Fair Employment law when used by out-of-state employers to screen out-of-state job applicants.
The company’s position: If a Texas employer uses Workday’s AI to screen a Texas applicant for a Texas job, only Texas law applies — regardless of where the discriminatory software actually runs.
What Job Seekers Over 40 Are Alleging
Lead plaintiff Derek Mobley and other applicants over 40 claim they submitted hundreds or thousands of job applications through Workday’s system without receiving interviews. They say the platform’s automated screening disproportionately excludes African American, Asian American, female, older, and disabled applicants.
“What plaintiffs are asking the court to do is to also apply California law, depending on who the defendant is in the action,” Workday attorney Kayla Grundy told U.S. District Judge Rita Lin. “That is not the way the law is intended to work.”
Why the Legal Question Matters
The case represents a critical test of whether companies can shelter AI discrimination by placing the technology in one state while selling its use nationwide. California’s civil rights protections rank among the nation’s strongest.
Judge Lin issued a tentative opinion May 27 addressing California’s Fair Employment law’s reach, though the source material doesn’t specify her preliminary conclusion.
The dispute cuts to a fundamental question facing millions of American job seekers: When artificial intelligence makes hiring decisions that allegedly discriminate, which state’s laws govern — where the software sits, where the employer operates, or where the rejected applicant lives?
Workday’s legal strategy would allow AI tools to effectively choose their regulatory environment, potentially routing discrimination claims to states with weaker protections while the decision-making code runs in California.
The court hasn’t ruled on the dismissal motion. A decision would determine whether the case proceeds under California’s civil rights framework or faces a patchwork of potentially weaker state laws.
Key Points
- Workday wants to dodge California civil rights law despite running AI hiring tools from its California headquarters
- Job seekers over 40 claim the company’s automated screening discriminates based on age, race, and disability
- The case tests whether AI companies can shelter discrimination by selling tools across state lines while choosing favorable legal jurisdictions
https://www.courthousenews.com/workday-asks-judge-to-dismiss-suit-over-claims-its-ai-tools-discriminate-against-job-applicants/ – June 16, 2026
