Court Grants Motion to Dismiss in AI Employment Discrimination Lawsuit

Court Grants Motion to Dismiss in AI Employment Discrimination Lawsuit

The U.S. District Court for the Northern District of California granted an employer’s motion to dismiss a class action lawsuit with leave for the plaintiff to amend the complaint.

This came in Mobley vs. Workday, Inc., a lawsuit alleging that Workday’s artificial intelligence (“AI”) systems and algorithm-based applicant screening tools discriminate against job applicants based on race, age, and disability. The lead plaintiff, Derek Mobley, claimed that, as an African-American man over the age of 40 with anxiety and depression, he applied to 80 to 100 jobs with companies that use Workday's screening tools and didn’t get a single job offer. He argued that “Workday relies upon subjective practices which have caused disparate impact and disparate treatment…” Moreover, the tools let these customers preselect applicants not within certain protected categories.


Mobley alleged that Workday’s screening tools interpret an applicant's qualifications and recommend whether he or she should be accepted or rejected. He claimed that Workday's customers can "manipulate and configure [the tools] in a discriminatory manner to recruit, hire, and onboard employees." According to the complaint, an applicant who doesn’t make it past Workday's screening products won’t advance in the hiring process.

Mobley has a bachelor's degree in finance from Morehouse College and an associate's degree in network systems administration from ITT Technical Institute. Since 2018, he applied to 80-100 positions with companies that use Workday's screening tools for talent acquisition and was denied employment every time. He asserted claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866 (42 U.S.C. § 1981), the Age Discrimination in Employment Act of 1967 ("ADEA"), and the ADA Amendments Act of 2008 ("ADAAA") for intentional discrimination on the basis of race and age and disparate impact discrimination on the basis of race, age, and disability.

On July 19, 2021, he filed an amended charge of discrimination with the EEOC, alleging Workday's selection tools and tests are discriminatory. On November 22, 2022, the EEOC issued a dismissal and notice of right to sue. Mobley filed this action on February 21, 2023.

Workday Moves to Dismiss

Workday first asked the district court to dismiss the complaint because Mobley failed to exhaust administrative remedies with the Equal Employment Opportunity Commission as to his intentional discrimination claims. But the court denied the motion because the allegations in the charge were reasonably related to his intentional discrimination claims and thus satisfied his obligation to exhaust remedies with the EEOC.

United States District Judge Rita F. Lin stated in her order that in employment discrimination cases, the complaint "need not plead a prima facie case of discrimination." "[H]eightened fact pleading of specifics" is not required, but the plaintiff must plead "enough facts to state a claim to relief that is plausible on its face."

Is Workday an "Employment Agency"?

Workday next argued that Mobley failed to allege facts to state a plausible claim that the company was liable as an "employment agency.” The allegations on that point were sparse, and Mobley didn’t allege facts sufficient to state a claim that Workday was "procuring" employees for these companies, as required for the defendant to qualify as an "employment agency." However, Mobley said he could amend his complaint to fix those deficiencies by pleading additional facts outlined in his opposition brief. At the motion hearing and in his opposition brief, he identified two other potential legal bases for Workday's liability: as an "indirect employer" and as an "agent."

At the hearing on the motion, Mobley advanced three possible theories on which Workday might be held liable: (1) as an employment agency; (2) as an indirect employer; and/or (3) as an agent of the companies that utilize Workday's screening tools. However, he alleged only an "employment agency" theory in his complaint. Workday argued that the complaint failed to plausibly allege that Workday is an "employment agency," a necessary predicate to all of Mobley's claims.

Judge Lin found that there were insufficient allegations in the complaint to support that Workday is an "employment agency." The paragraph of the complaint alleging this was entirely conclusory, and elsewhere, there were few allegations detailing Workday's involvement in procuring employees. Mobley didn’t allege details about his application process other than that he applied to jobs with companies using Workday and didn’t get any of them.

The complaint didn’t allege that Workday helps recruit and select applicants. Mobley's primary allegation was that Workday offers discriminatory applicant screening tools to companies seeking to hire employees, but he didn’t allege if the tools perform screening based solely on employer criteria, Workday's own algorithm(s), or some combination of the two. Nor did he allege whether Workday is involved in procuring applications or only in helping companies organize the applications they receive independently. Given the paucity of factual allegations, the complaint didn’t allege that Workday was significantly involved enough in procuring employees to face liability as an "employment agency" and thus fails to state the claims asserted, Judge Lin concluded.

As for Mobley's two additional theories of liability—an "indirect employer" theory raised in his opposition to the motion to dismiss, and an "agency" theory raised at the hearing on the motion—neither theory was alleged in the complaint, and the complaint didn’t contain factual allegations sufficient to state a plausible claim under either of those theories. Concerning the indirect employer theory, the current version of the complaint had few factual allegations about Workday's control over, participation in, or interference with the job application process. The complaint also didn’t contain factual allegations about companies delegating control to Workday over the hiring process, as required for an agency theory of liability.

Judge Lin also found that the complaint as pleaded lacked allegations sufficient to support an inference of intentional discrimination by Workday. "Stating a claim for disparate treatment requires pleading facts giving rise to an inference that the employer intended to discriminate against the protected group,” she wrote quoting a 2021 decision. Mobley didn’t allege that he disclosed any of his protected traits to Workday or that Workday otherwise knew of or suspected his traits. Nor did he plausibly allege that he was qualified for the 80-100 jobs for which he applied. To that end, the complaint lacked any factual allegations about the types of jobs for which he applied, their requirements, or his qualifications beyond his education. Without this information, the judge said she couldn’t conclude that it was plausible that the reason Mobley didn’t get a job offer was because of his protected traits rather than his qualifications.

To state a claim for disparate impact discrimination under Title VII, a plaintiff must allege:

  1. A significant disparity with respect to employment for the protected group;
  2. The existence of a specific employment practice or set of practices; and
  3. A causal relationship between the identified practice and the disparity.

And at the pleading stage, the complaint only has to allege facts giving rise to plausible inferences that the disparity exists and is caused by the identified practice.

As for disparity, the only non-conclusory factual allegations regarding disparity were based on his own personal experience. But even those allegations were sparse. The plaintiff alleged that he applied to 80 -100 jobs but didn’t claim what types of jobs those were, what his qualifications were for those jobs, or whether he got better results applying to similar jobs that didn’t use Workday.

Mobley also failed to adequately allege a specific employment practice. The complaint focuses on Workday's "screening tools" but it was unclear what or whose specific use of the tools is allegedly discriminatory.

Finally, the judge said that the complaint failed to allege a plausible theory of causation. Mobley didn’t plead a significant disparity sufficient to infer causation, nor did he cite any data, scientific literature, or personal experiences to support the theory that Workday's screening tools had a discriminatory impact on a specific protected group.

As a result, Workday's motion to dismiss was granted with leave to amend. Mobley was given until February 20th to file an amended complaint curing the deficiencies identified in the judge’s order. If fails to do so, the case will be dismissed. Mobley v. Workday, Inc. (United States District Court for the Northern District of California, 1/19/24).

Bottom Line

The Court agreed with Workday that the applicant’s complaint failed to sufficiently allege facts showing that Workday qualifies as an “employment agency” that could be subject to liability under the anti-discrimination laws.

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