Artificial intelligence is rapidly transforming how businesses operate, especially in recruiting and hiring. With promises of greater efficiency, speed, and cost savings, AI-driven hiring tools are quickly gaining traction. But with these benefits come new legal challenges that employers must be mindful of.
Recent lawsuits highlight growing concerns about whether these tools unintentionally discriminate against job applicants based on protected characteristics. As AI becomes a mainstream tool used in hiring, employers must stay informed about the legal risks involved.
Recent Legal Challenges to the Use of AI-Based Hiring Tools
One notable case gaining national attention is a case out of a federal court in California, Mobley v. Workday.1 In this case, the court recently granted a motion to preliminarily certify a collective action in a lawsuit alleging age discrimination against applicants aged 40 and over.
The plaintiff, Mobley, alleged he received hundreds of rejections after applying for jobs through Workday, a widely used human resources platform that screens job applications using AI. Workday offers a platform to collect, process, and screen job applications. According to the plaintiff’s allegations, Workday embeds artificial intelligence into its algorithmic decision-making tools, which led to disproportionate disqualification of older applicants.
Mobley sought preliminary certification of a nationwide collective (similar to a class action) under the Age Discrimination in Employment Act and proposed a collective defined as “All individuals aged 40 and over who, from September 24, 2020, through the present, applied for job opportunities using Workday, Inc.’s job application platform and were denied employment recommendations.”
The court was tasked with determining whether Mobley had sufficiently alleged that the proposed collective of job applicants were “similarly situated.” The Ninth Circuit, where this federal court sits, found that the plaintiffs had sufficiently alleged a unified policy – the use of Workday’s AI tools – as the common source of the alleged discriminatory impact. This cleared the way for preliminary certification.
Preliminary certification allows the plaintiffs to notify other potentially affected individuals, giving them the opportunity to “opt-in” to the lawsuit.2 While the court acknowledged that more work is needed to define the scope of the collective, determine notice feasibility, and finalize the notification language, the case is already being closely watched for its broader implications.
A similar case was recently filed in August 2025. A lawsuit was filed in a federal court in Michigan, Harper v. Sirius XM Radio, where the plaintiff is alleging the company’s AI-powered hiring tool discriminated against him based on his race.3 According to the complaint, the plaintiff was rejected from roughly 150 positions he believes he was qualified for. He alleges the AI system contains embedded historical biases that resulted in discriminatory treatment. His claims include disparate treatment, disparate impact, and intentional employment discrimination.
It is important to note that these are only the plaintiff’s allegations and his side of the story. The court has not made any findings on this case. Still, the case reflects a growing trend: an increase in the claims around the use of these tools.
What Does This Mean for Employers?
These decisions reflect the growing trend: of legal scrutiny that will continue to stem from the use of AI-tools in employment decisions. These cases show the potential risks employers could face associated with these technologies. Employers that use AI tools to screen job applicants, or make any other employment-related decisions, should remain aware of how AI is being used in the hiring process and decision making.
The technology and laws surrounding AI in the workplace are ever changing, and while there is no “one size fits all” answer for best handling these issues, employers can continue to implement practices to mitigate risks. Employers should retain human oversight in employment decisions, document processes including reasoning for how hiring decisions are made, and monitor hiring platforms and tools to identify any disparities in candidates. Building awareness, accountability, and clear documentation into hiring processes is a strong starting point for mitigating risk and fostering fair practices.
- Mobley v. Workday, Inc., 23-CV-00770-RFL, 2025 WL 1424347 (N.D. Cal. May 16, 2025). ↩︎
- Under the Age Discrimination in Employment Act, plaintiffs may bring a collective action on behalf of other individuals under a procedure in the Fair Labor Standards Act. This procedure allows the lead plaintiff to seek preliminary certification and send court-approved notice to individuals who may then join or “opt-in” to the litigation. ↩︎
- U.S. District Court, Eastern District of Michigan (2:25-cv-12403). ↩︎