{"id":1655,"date":"2024-07-16T07:49:45","date_gmt":"2024-07-16T11:49:45","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/classactiondefense\/?p=1655"},"modified":"2024-07-16T07:49:45","modified_gmt":"2024-07-16T11:49:45","slug":"california-federal-court-denies-motion-to-dismiss-artificial-intelligence-employment-discrimination-lawsuit","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/classactiondefense\/2024\/07\/16\/california-federal-court-denies-motion-to-dismiss-artificial-intelligence-employment-discrimination-lawsuit\/","title":{"rendered":"California Federal Court Denies Motion To Dismiss Artificial Intelligence Employment Discrimination Lawsuit"},"content":{"rendered":"

\"\"<\/a>By Alex W. Karasik, Gerald L. Maatman, Jr. and George J. Schaller<\/strong><\/p>\n

Duane Morris Takeaways<\/em><\/strong>: \u00a0<\/strong>In<\/em>\u00a0Mobley v. Workday, Inc., Case No. 23-CV-770 (N.D. Cal. July 12, 2024) (ECF No. 80)<\/em>,\u00a0Judge Rita F. Lin of the U.S. District Court for the Northern District of California granted in part and denied in part<\/a>\u00a0Workday\u2019s Motion to Dismiss Plaintiff\u2019s Amended Complaint concerning allegations that Workday\u2019s algorithm-based screening tools discriminated against applicants on the basis of race, age, and disability.\u00a0This litigation has been closely watched for its novel case theory based on artificial intelligence use in making personnel decisions. For employers utilizing artificial intelligence in their hiring practices, tracking the developments in this cutting-edge case is paramount.\u00a0 This ruling illustrates that employment screening vendors who utilize AI software may potentially be liable for discrimination claims as agents of employers. \u00a0<\/em><\/p>\n

This development follows Workday\u2019s first successful Motion to Dismiss, which we blogged about <\/em>here<\/em><\/a>, and the EEOC\u2019s amicus brief filing, which we blogged on <\/em>here<\/em><\/a>.\u00a0 <\/em><\/p>\n

Case Background<\/strong><\/p>\n

Plaintiff is an African American male over the age of 40, with a bachelor\u2019s degree in finance from Morehouse College, an all-male Historically Black College and University, and an honors graduate degree. Id. <\/em>at 2. Plaintiff also alleges he suffered from anxiety and depression. \u00a0Since 2017, Plaintiff applied to over 100 jobs with companies that use Workday\u2019s screening tools.\u00a0 In many applications, Plaintiff alleges he was required to take a \u201cWorkday-branded assessment and\/or personality test.\u201d\u00a0 Plaintiff asserts these assessments \u201clikely . . . reveal mental health disorders or cognitive impairments,\u201d so others who suffer from anxiety and depression are \u201clikely to perform worse \u00a0\u2026 and [are] screened out.\u201d\u00a0 Id.<\/em> at 2-3.\u00a0 Plaintiff was allegedly denied employment through Workday\u2019s platform across all submitted applications.<\/p>\n

Plaintiff alleges Workday\u2019s algorithmic decision-making tools discriminate against job applicants who are African-American, over the age of 40, and\/or are disabled.\u00a0 Id.<\/em> at 3.\u00a0 In support of these allegations, Plaintiff claims that in one instance, he applied for a position at 12:55 a.m. and his application was rejected less than an hour later.\u00a0 Plaintiff brought claims under Title VII of the Civil Rights Act of 1964 (\u201cTitle VII\u201d), the Civil Rights Act of 1866 (\u201cSection 1981\u201d), the Age Discrimination in Employment Act of 1967 (\u201cADEA\u201d), and the ADA Amendments Act of 2008 (\u201cADA\u201d), for intentional discrimination on the basis of race and age, and disparate impact discrimination on the basis of race, age, and disability. Plaintiff also brings a claim for aiding and abetting race, disability, and age discrimination against Workday under California\u2019s Fair Employment and Housing Act (\u201cFEHA\u201d).\u00a0 Workday moved to dismiss, where Plaintiff\u2019s opposition was supported by an amicus brief filed by the EEOC.<\/p>\n

The Court\u2019s Decision<\/strong><\/p>\n

The Court granted in part and denied in part Workday\u2019s motion to dismiss. \u00a0At the outset of its opinion, the Court noted that Plaintiff alleged Workday was liable for employment discrimination, under Title VII, the ADEA, and the ADA, on three theories: as an (1) employment agency; (2) agent of employers; and (3) an indirect employer. Id. <\/em>at 5.<\/p>\n

The Court opined that relevant statute prohibits discrimination \u201cnot just by employers but also by agents of those employers,\u201d so an employer cannot \u201cescape liability for discrimination by delegating [] traditional functions, like hiring, to a third party.\u201d\u00a0 Id.<\/em>\u00a0 Therefore, an employer\u2019s agent can be independently liable when the employer has delegated to the agent \u201cfunctions [that] are traditionally exercised by the employer.\u201d\u00a0 Id.<\/em><\/p>\n

In regards to the \u201cemployment agency\u201d theory, the Court reasoned employment agencies \u201cprocure employees for an employer\u201d \u2013 meaning \u2013 \u201cthey find candidates for an employer\u2019s position; they do not actually employ those employees.\u201d\u00a0 Id.<\/em> at 7.\u00a0 The Court further reasoned employment agencies are liable when they \u201cfail or refuse to refer\u201d individuals for consideration by employers on prohibited bases.\u00a0 Id.<\/em>\u00a0The Court held Plaintiff did not sufficiently allege Workday finds employees for employers such that Workday is an employment agency.\u00a0 Accordingly, the Court granted Workday\u2019s motion to dismiss with respect to the anti-discrimination statutes based on an employment agency theory, without leave to amend.<\/p>\n

In addition, the Court held that Workday may be liable on an agency theory, as Plaintiff plausibly alleged Workday\u2019s customers delegated their traditional function of rejecting candidates or advancing them to the interview stage to Workday.\u00a0 Id.<\/em>\u00a0 The Court determined if it reasoned otherwise, and accepted Workday\u2019s arguments, then companies would \u201cescape liability for hiring decisions by saying that function has been handed to over to someone else (or here, artificial intelligence).\u201d\u00a0 Id.<\/em> at 8.\u00a0 The Court determined Plaintiff\u2019s allegations that Workday\u2019s decision-making tools \u201cmake hiring decisions\u201d as it\u2019s software can \u201cautomatically disposition[] or move[] candidates forward in the recruiting process\u201d were plausible.\u00a0 Id. <\/em>at 9.<\/p>\n

The Court opined that given Workday\u2019s allegedly \u201ccrucial role in deciding which applicants can get their \u2018foot in the door\u2019 for an interview, Workday\u2019s tools are engaged in conduct that is at the heart of equal access to employment opportunities.\u201d\u00a0 Id.<\/em>\u00a0 In regards to artificial intelligence, the Court noted \u201cWorkday\u2019s role in the hiring process was no less significant because it allegedly happens through artificial intelligence,\u201d and the Court declined to \u201cdraw[] an artificial distinction between software decision-makers and human decision-makers,\u201d [sic] as any distinction would \u201cgut anti-discrimination laws in the modern era.\u201d\u00a0 Id.<\/em> at 10.<\/p>\n

Accordingly, the Court denied Workday\u2019s motion to dismiss Plaintiff\u2019s federal discrimination claims.<\/p>\n

Disparate Impact Claims<\/u><\/em><\/p>\n

The Court next denied Workday\u2019s motion to dismiss Plaintiff\u2019s disparate impact discrimination claims as Plaintiff adequately alleged all elements of a prima facie <\/em>case for disparate impact.<\/p>\n

First, Plaintiff\u2019s amended complaint asserted that Workday\u2019s use of algorithmic decision-making tools to screen applicants including training data from personality tests had a disparate impact on job-seekers in certain protected categories.\u00a0 Second, the Court similarly found disparate treatment present and recognized Plaintiff\u2019s assertions were not typical.\u00a0 \u201cUnlike a typical employment discrimination case where the dispute centers on the plaintiff\u2019s application to a single job, [Plaintiff] has applied to and been rejected from over 100 jobs for which he was allegedly qualified.\u201d\u00a0 Id<\/em>. at 14.\u00a0 The Court reasoned the \u201ccommon denominator\u201d for these positions was Workday and the platform Workday provided to companies for application intake and screening.\u00a0 Id.<\/em><\/p>\n

The Court held \u201c[t]he zero percent success rate at passing Workday\u2019s initial screening\u201d combined with Plaintiff\u2019s allegations of bias in Workday\u2019s training data and tools plausibly supported an inference that Workday\u2019s algorithmic tools disproportionately rejects applicants based on factors other than qualifications, such as a candidate\u2019s race, age, or disability. \u00a0Id<\/em>. at 15.\u00a0 The Court therefore denied Workday\u2019s motion to dismiss the disparate impact claims under Title VII, the ADEA, and the ADA.\u00a0 Id. <\/em>at 16.<\/p>\n

Intentional Discrimination Claims<\/u><\/em><\/p>\n

The Court granted Workday\u2019s motion to dismiss Plaintiff\u2019s claims that Workday intentionally discriminated against him based on race and age.\u00a0 Id.<\/em>\u00a0 The Court found that Plaintiff sufficiently alleged he was qualified through his various degrees and qualifications and areas of expertise, supported by his work experience.\u00a0 However, the Court found Plaintiff\u2019s allegations that Workday intended its screening tools to be discriminatory as \u201cWorkday [was] aware of the discriminatory effects of its applicant screening tools\u201d was not enough to satisfy his pleading burden.\u00a0 Id.<\/em> at 18.\u00a0 Accordingly, the Court granted Workday\u2019s motion to dismiss Plaintiff\u2019s intentional discrimination claims under Title VII, the ADEA, and \u00a7 1981, without leave to amend, but left open the door for Plaintiff to amend if a discriminatory intention is revealed during future discovery.\u00a0 Id.<\/em>\u00a0 \u00a0Finally, the Court granted Workday\u2019s motion to dismiss Plaintiff\u2019s California\u2019s Fair Employment and Housing Act with leave to amend.<\/p>\n

Implications For Employers<\/strong><\/p>\n

The Court\u2019s resolution of employer liability for software vendors that provide AI-screening tools for employers centered on whether those tools were involved in \u201ctraditional employment decisions.\u201d \u00a0Here, the Court held that Plaintiff sufficiently alleged that Workday was an agent for employers since it made employment decisions in the screening process through the use of artificial intelligence.<\/p>\n

This decision likely will be used as a roadmap for the plaintiffs\u2019 bar to bring discrimination claims against third-party vendors involved in the employment decision process, especially those using algorithmic software to make those decisions. Companies should also take heed, especially given the EEOC\u2019s prior guidance that suggests employers should be auditing their vendors for the impact of their use of artificial intelligence.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Alex W. Karasik, Gerald L. Maatman, Jr. and George J. Schaller Duane Morris Takeaways: \u00a0In\u00a0Mobley v. Workday, Inc., Case No. 23-CV-770 (N.D. Cal. July 12, 2024) (ECF No. 80),\u00a0Judge Rita F. Lin of the U.S. District Court for the Northern District of California granted in part and denied in part\u00a0Workday\u2019s Motion to Dismiss Plaintiff\u2019s … <\/p>\n

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