Labor & Employment Law Daily Wrap Up, DISCRIMINATION—AGE—N.D. Cal.: Claims Workday’s AI-based recommendation system had disparate impact preliminarily certified, (May 20, 2025)

By Robert Margolis, J.D.

The plaintiffs met the threshold requirement for preliminary certification by showing proposed collective members are similarly situated due to the existence of a unified policy in the form of an AI recommendation system.

A federal district court in California granted a motion for preliminary certification of a collective action on an age discrimination claim alleging disparate impact. The court held that a proposed nationwide collective of individuals 40 and older who applied for jobs using the Workday, Inc., artificial intelligence (AI)-based application platform, and were denied employment, are sufficiently “similarly situated” in that they were victims of a unified policy: the use of Workday’s AI recommendation system to score, sort, rank, or screen job applicants. In granting the motion, the court held the plaintiff demonstrated that the elements of his prima facie disparate impact case are susceptible to common proof, and that the challenges to collective action raised by Workday either lacked merit or were more properly addressed at later stages of the litigation (Mobley v. Workday, Inc., No. 3:23-cv-00770-RFL (N.D. Cal. May 16, 2025)).

The applicant, who is over the age of 40, alleges he submitted more than 100 job applications to potential employers that use Workday’s screening features for hiring, and was denied employment every time. He submitted declarations from four opt-in plaintiffs who similarly are older than 40 and submitted “hundreds of employment applications to prospective employers” through the Workday system and have been rejected nearly every time.

Prior to moving for preliminary certification, the applicant defeated a motion to dismiss. The court found that he alleged a disparate impact claim for discrimination under the ADEA based on allegations that: (1) employers using Workday delegate traditional hiring functions, including rejecting applicants, to Workday’s AI-based algorithmic decision-making tools; (2) Workday’s software does not just reflect the criteria employers themselves express, but instead participates in the decision-making process by recommending some candidates and rejecting others; and (3) as such, Workday’s tools engage in conduct at the heart of equal access to employment opportunities, and plausibly create a disparate impact.

Preliminary certification. The FLSA allows one or more employees to bring a collective action against any employer on behalf of themselves and other “similarly situated” employees. Under Ninth Circuit law, plaintiffs meet the threshold of being “similarly situated” with other employees by providing “substantial allegations” that putative class members were “victims of a single decision, policy, or plan.” This is true even if individual issues may “ultimately require a degree of individual adjudication.”

Ninth Circuit courts generally employ a two-stage process to determine whether the members of a proposed collective are “similarly situated.” At the preliminary certification stage, courts examine the pleadings to see if it is plausible that the proposed collective members are similarly situated. If the court determines the plaintiffs have met this standard, the consequence is that court-approved notice is sent to workers who may wish to join the litigation. The case then proceeds through discovery.

After discovery, the employer can move for “decertification” if the evidence obtained in discovery demonstrates the failure to satisfy the “similarly situated” standard. In granting the plaintiffs’ motion for preliminary certification, the court considered several of Workday’s arguments to be better raised after discovery and at the second stage of the certification process.

No sliding scale. Because some discovery had already occurred at the time the plaintiff filed the preliminary certification motion, Workday argued that the plaintiff’s burden of proof should be higher than mere plausibility based solely on review of the pleadings. The court held that argument to be untenable. It would be impossible to apply with consistency and would encourage gamesmanship, as a court would have to weigh competing evidence on an incomplete record, encouraging parties to withhold critical evidence until after a preliminary certification ruling.

Similarly situated. The court found the lead plaintiff met the burden of showing it plausible that the members of the proposed collective are similarly situated, in that he showed the elements of the prima facie elements of the disparate impact claim are susceptible to common proof. He identified a common policy applicable to all the putative members of the collective—the mechanisms behind Workday’s AI recommendation system. How that system effects workers over 40 years of age, and whether the effects of those mechanisms generated a disparate impact on account of age, are common questions applicable to all members of the collective. Workday’s arguments about how it is impossible for a collective to be similarly situated raised matters better dealt with later in the proceedings, the court held.

“Recommend” applicants. Citing interrogatory responses, Workday asserted it does not “recommend, screen out, or otherwise assess” applicants. Therefore, according to Workday, no one has ever been denied employment recommendations by Workday, so there can be no members of the collective. But the court noted conflicting allegations in the complaint assertions and elsewhere in Workday’s interrogatory responses, including that Workday’s website uses its tools to create “AI- and ML-driven job recommendations” and that customers can receive AI-generated ratings of applicants’ fit for applied-for roles.

The court understood Workday’s argument to be that because it does not “auto-reject” applicants, no members can assert it caused their rejection. But the plaintiff’s disparate impact theory did not depend on Workday itself “rejecting” applicants, but that Workday’s AI participates in the decision-making process. How Workday’s AI system scores applicants and how those scores translate into an applicant’s “rejection” are fact questions for later. But they do not mean a collective action should not be certified, the court held.

Unified policy. Next, Workday argued that because employers can choose to use or not use Workday’s AI tools, the plaintiff has not shown a unified policy applicable to all putative members of the collective. But as the court pointed out, the definition of the collective only includes individuals whose applications were subject to Workday’s AI because the employer chose to use those features. Further, by limiting the collective to those who were “denied employment recommendations” by Workday, the collective necessarily includes only those screened by the AI tool and who either had their application withheld from the employer or received a grade from Workday that led to their rejection.

Finally, any differences among different employers as to how they used the Workday AI tool would not defeat the commonality of their claims. In any large disparate impact case, there typically are differences in how a policy impacts some portions of a company’s workforce as compared with others. But so long as statistical evidence can be used to demonstrate disparate impact generally, such distinctions will not defeat the claim.

Individual characteristics. The court also rejected Workday’s argument that differences among individual job applicants as to whether they met the requirements of the jobs to which they applied, limited indicia of their age in their applications, and/or received job interviews or offers before being rejected, preclude a finding of substantial similarity. But the plaintiff is not required at the preliminary certification stage to prove that all putative members are identically situated. Instead, the burden is to show factual similarities that are material to the resolution of the case. While it is certainly possible that the types of differences Workday identified will necessitate individual inquiries, how that would impact the ability to proceed as a collective action is a matter best addressed at the second stage of the process, after discovery, the court held.

Limits on collective. Finally, Workday argued that the collective can only include individuals who applied to a high number of jobs, were qualified for every job to which they applied, and were rejected every time. The court held this argument was “irrelevant” at this stage because the question is whether there is sufficient commonality to proceed as a collective, not whether all individuals within the collective could win on their individual claims. Further, while such issues might affect an employee’s standing to seek damages, they would not defeat the right to seek injunctive relief (which the plaintiff also seeks), and those issues can be resolved in separate adjudications, which are not precluded even if the case proceeds as a collective action.

The case is No. 3:23-cv-00770-RFL.

Judge: Lin, R.

Attorneys: Jay Patrick Greene (The Greene Law Firm) for Derek Mobley. Julie Ann Totten (Orrick, Herrington & Sutcliffe) for Workday, Inc.

Companies: Workday, Inc.

Cases: Discrimination AINews ClassActions CaliforniaNews