When AI hires people, can the company behind the software get sued?

A big software firm called Workday is now in court over claims that its hiring tools unfairly screen out job applicants. The case started in 2023 and is the first major lawsuit targeting AI-powered hiring software. A judge in California recently decided the company can’t escape the lawsuit and must face the claims. Workday says California’s anti-discrimination rules shouldn’t apply because it screens people applying for jobs outside the state. But the judge disagreed, saying the company could still be held responsible since its software is designed and run from California. The lawsuit also argues that Workday’s AI may reject applicants based on hidden signs of disabilities—like gaps in work history—violating federal disability laws.Not all claims survived the judge’s review. A claim about Asian American applicants was dropped because the plaintiffs didn’t follow the correct steps to include it. However, the case still covers discrimination against Black job seekers, women, and applicants over 40. Workday hasn’t commented publicly. The lawsuit shines a light on a growing problem: AI hiring tools are used by over 80% of U. S. employers, including nearly all Fortune 500 companies. Experts warn that if these tools learn from biased data, they can keep unfair hiring practices alive without anyone noticing.