Recent Developments in Mobley v. Workday: California Court Allows Key AI-Hiring Bias Claims to Move Forward
By Ethan Krasnoo and Lucia Mead
On June 22, 2026, in Mobley v. Workday, Inc., U.S. District Judge Rita Lin largely denied Workday’s motion to dismiss the plaintiffs’ Third Amended Complaint, including rejecting the company’s argument that California’s anti-discrimination laws do not apply to its screening of applicants outside California who are applying for jobs in other states or countries.[1] The decision represents another significant development in Mobley, a closely watched lawsuit alleging that Workday, Inc., a provider of cloud-based human resources software, including AI-powered recruiting tools used by employers in the hiring process, unlawfully discriminates against job applicants based on protected characteristics, including race, age, sex, and disability, in violation of federal and state anti-discrimination laws.
We previously wrote about Mobley in February 2026, when the case had already emerged as one of the first major lawsuits examining whether an AI technology provider could face liability for alleged discriminatory outcomes in employment hiring. At that time, we discussed the potential litigation implications for employers using AI-assisted hiring tools, including the importance of conducting due-diligence on AI vendors, auditing systems for potential bias, and maintaining meaningful human oversight over automated hiring processes.
The court’s latest ruling further underscores these concerns by allowing several of the plaintiffs’ key discrimination claims to proceed. Most notably, Judge Lin held that Workday may face claims under California’s anti-discrimination statutes even where its AI-powered hiring tools were used to screen applicants for positions outside California. The court reasoned that because the alleged discriminatory conduct stemmed from Workday’s California-based operations and decision-making, California law could potentially apply despite the geographic location of the applicants or prospective employers.[2]
The court also allowed the plaintiffs’ Americans with Disabilities Act (“ADA”) claim to proceed, rejecting Workday’s argument that the allegations were insufficient. The plaintiffs allege that the software may disproportionately exclude applicants with disabilities by relying on “proxy indicators,” such as gaps in employment history indicated by medical-related leave, or patterns consistent with treatment and recovery. The court did, however, dismiss the plaintiffs’ newly asserted claim regarding discrimination against Asian American applicants, finding that it was not properly added to the case at this stage nor that it was plausibly pled.[3]
Although the decision at this stage of the case does not reach a conclusion as to whether Workday’s technology is discriminatory, it allows the plaintiffs to continue pursuing their claims through the discovery and further highlights the growing scrutiny surrounding AI-driven hiring tools. As Mobley progresses, employers and AI vendors should closely monitor the case, as its outcome may provide further guidance regarding the legal obligations and best practices for implementing AI-driven hiring tools in the workplace.
[1] Mobley v. Workday, Inc., No. 3:23-cv-00770-RFL, Order Denying in Part Defendant’s Motion to Dismiss Plaintiffs’ Fourth Amended Complaint (N.D. Cal. June 22, 2026), https://storage.courtlistener.com/recap/gov.uscourts.cand.408645/gov.uscourts.cand.408645.360.0.pdf.
[2] Id. at 7-8.
[3] Id. at 8-9.
For more information, please contact RPJ Partner Ethan Krasnoo who counsels clients in areas of complex commercial litigation, arbitration, mediation and dispute resolution, and employment, intellectual property, and entertainment and media. Mr. Krasnoo is admitted to practice law in New York, the United States District Courts for the Southern and Eastern Districts of New York, the United States Court of Appeals for the Second Circuit and United States Tax Court.