We have previously discussed the potential for discrimination and bias with the adoption of AI in business operations. Recent court filings raise the question of whether software developers, in addition to the employers that use their programs, can be liable for the discriminatory impact of AI in the hiring process.

In Mobley v. Workday, Plaintiff Mobley (Mobley) claimed defendant Workday (“Workday”), which provides a broad range of employment related software including candidate screening software, disproportionately excluded applicants based on age, race, and disability. The case was eventually certified as a class action potentially opening the claims to millions of additional rejected applicants.

Workday responded, in part, that it was not liable to individuals under the federal Age Discrimination in Employment Act (ADEA) (and other anti-discrimination statutes, namely  Title VI and the ADA) for the disparate impact of age-based bias in Workday’s screening software. Workday argued that “agents” as defined establishes an employer’s responsibility for acts of its agents but does not hold agents independently liable and cited   Ninth Circuit Court of Appeals precedence in Miller v. Maxwell’s International to support its position that “the concept of agency liability” had been rejected “under the federal anti-discrimination statutes altogether” (ADEA, Title VII, ADA) and argued the ADEA did not apply to applicants.

The U.S. District Court for the Northern District of California disagreed and distinguished the difference in liability of an employment agency which “procures employees for an employer” but does not employ the employees and is not subject to the same prohibitions as employers. It further noted the different role of an employer whose traditional functions relate to hiring, discharge, compensation, and promotion of employees. The court found that facts plausibly alleged an agent relationship between Workday and its customers (employers) for purposes of disparate impact liability as “Workday’s customers (employers) delegated their traditional function of rejecting candidates or advancing them to the interview stage to Workday.”

In rejecting Workday’s request to dismiss the ADEA claims, the court also deferred to the EEOC’s historical treatment of ADEA protections, noting  the EEOC’s  longstanding pattern of extending ADEA protections to job applicants which the court found persuasive.  The case is currently in active litigation and has not been concluded.

The agency concept and the court’s determination Workday could be independently liable for claims is important in terms of establishing those who are responsible for the disparate impact of AI applications. However, this does not relieve employers of their own liability for any disparate impact arising from use of AI. As the case law and statutory language develops to align with rapid AI proliferation, best practices for employers are to understand and have knowledge of what data is collected and the criteria AI is using to evaluate data, including applicant data.

In addition, employers should continue to evaluate related policies on AI use as the law and regulations develop. If you or your organization need assistance navigating hiring or other employment practices and AI resources, contact Wiley Reber Law for legal advice that works.