Algorithm Based Discrimination Lawsuit Against Workday Is Dismissed…For Now

Workday recently survived a complaint by a job applicant who claimed Workday’s algorithm screening tools “discriminated against him and other similarly situated job applicants on the basis of race, age, and disability.”  Initially, Plaintiff Derek Mobley filed a charge of discrimination with the Equal Employment Opportunity Commission.  Thereafter, the EEOC issued a dismissal and right to sue letter, permitting Mobley to file suit in federal court against Workday.  He did so on February 21, 2023, and asserted claims under Title VII of the Civil Rights Act (Title VII), the Civil Rights Act of 1866, the Age Discrimination in Employment Act (ADEA), and the ADA Amendments Act of 2008 (ADAAA).  Workday moved to dismiss the complaint.  The U.S. District Court for the Northern District of California granted the motion in part, denied the motion in part, and granted Mobley leave to amend his complaint.

Mobley argued three theories of liability against Workday: Workday was an employment agency; Workday was an indirect employer; and Workday was an agent of the companies who used its services.  Under Title VII and the ADA, an employment agency is defined as “any person regularly undertaking with or without compensation to procure employees for an employer or to procure for employees opportunities to work for an employer and includes an agent of such person.”  Similarly, the ADEA defines the term as “any person regularly undertaking with or without compensation to procure employees for an employer and includes an agent of such person.”  The Court found that Mobley provided insufficient allegations that Workday was an employment agency, finding his allegations “entirely conclusory.”  The Court noted allegations which Mobley lacked, including that Workday helped to recruit and select applicants; that the tools provided by Workday screened based on Workday’s algorithm, the hiring company’s criteria, or a mix of the two; and that Workday was involved in procuring applications.

Likewise, the Court found Mobley’s indirect employer theory and agency theory failed due to the lack of factual allegations.  Indirect employer liability exists “where the alleged indirect employer engages in ‘discriminatory interference’ and has ‘some peculiar control’ over the employee’s relationship with the direct employer.”  The Court referenced the EEOC’s article, Select Issues: Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964, which states that “software vendors” may qualify as “agents” “if the employer has given them authority to act on the employer’s behalf,” which “may include situations where an employer relies on the results of a selection procedure that an agent administers on its behalf.”

The Court also stated that Mobley’s allegations for an inference of intentional discrimination failed because there were no allegations that Workday knew Mobley’s protected traits, he did not allege he was qualified for the jobs for which he applied, and did not provide what types of jobs he applied for.  To obtain an inference for intentional discrimination, the plaintiff must show that the employer intended to discriminate against the protected group.  

Similarly, his disparate impact claim failed.  “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.”  Again, the Court faulted Mobley for the lack of factual allegations, finding he had not met his burden for either of the three elements.

The Court, however, did grant Mobley leave to amend his complaint.  He has until February 20, 2024 to file his amended complaint. 

This case was highly anticipated – it is one of the first cases dealing with AI based discrimination.  As we can see, it is a difficult case to prove.  Yet, Mobley’s opportunity to amend his complaint may lead to interesting developments.

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