Workday can't cut California law claims from a proposed class action alleging its artificial intelligence tools discriminated against job applicants, as a federal judge ruled Monday that the company's Golden State headquarters provided a solid enough foundation for the state-based allegations.

U.S. District Judge Rita F. Lin largely denied Workday's motion to partially dismiss the third amended complaint filed in the lawsuit alleging the company provided AI tools that screened out job applicants based on age, race and disability status. The decision allows the group of four workers, led by Derek Mobley, to add gender-, race- and age-based discrimination claims under California's Fair Employment and Housing Act to their case.

According to Judge Lin, the workers' complaint adequately alleges that Workday designed, developed and controlled the hiring tools from its Pleasanton, California, headquarters, which provides enough of a connection to the state to sustain the FEHA claims.

"Although Workday argues that these allegations are too conclusory because they do not describe which tools were allegedly designed and operated from California, at the pleading stage plaintiffs' allegations sufficiently describe the artificial intelligence and machine learning tools at issue," Judge Lin wrote. "None of Workday's other arguments change this conclusion."

The ruling follows a May 27 tentative ruling in which Judge Lin suggested the FEHA claims were valid and cast doubt on Workday's argument that it couldn't be held liable under state law for decisions made by employers outside California. During a June 15 hearing, the judge also pushed back on Workday's assertion that the state law didn't apply, saying the company's position seemed to suggest it would "be subject to the laws of all 50 states and countries around the world" depending on which employer is using its software.

On Monday, Judge Lin said Workday's argument conflicts with the California Supreme Court's August 2023 ruling in Raines v. U.S. Healthworks Medical Group , which held that companies acting on behalf of employers can be held directly liable for employment discrimination claims under FEHA.

The judge said a California appeals court's 1996 decision in Campbell v. Arco Marine Inc. also confirms that the workers' FEHA claims against Workday can stay in court. In Campbell, the Fourth Appellate District refused to apply FEHA to alleged sexual harassment of a non-California resident that occurred at sea because there was no connection to the state, but Judge Lin noted that Mobley and the other workers allege Workday's conduct occurred in California.

"Indeed, it is difficult to see how applying California law to a company headquartered in California for its own California-based conduct raises serious constitutional concerns," Judge Lin wrote.

The judge also said the allegations in the third amended complaint were detailed enough to bolster a disability discrimination claim brought by worker Jill Hughes, who claims she was discriminated against because of her history of asthma and cancer.

Hughes' claim was previously dismissed, but the most recent complaint alleges that Workday's tools use medical-related leave and "patterns consistent with treatment and recovery" to flag and screen out applicants, according to Judge Lin. Hughes claims she was repeatedly rejected by multiple employers using Workday's software.

However, Judge Lin dismissed a race bias claim brought by an Asian American worker, FaithLinh Rowe, saying it wasn't mentioned when Rowe first joined the case, and the workers weren't given permission to add the claim.

"Rowe has failed to show good cause for why she did not assert her claim in the [second amended complaint]," Judge Lin wrote. "Therefore, Rowe's race-based disparate impact claim is dismissed, and the unauthorized allegations added to the TAC in support of the claim are stricken."

Mobley claims in the proposed class action, filed in 2023, that Workday's AI tools discriminated against Black workers, those with disabilities and those over the age of 40 by screening out job applicants based on their race, disability status and age. He said the company violated Title VII, the Age Discrimination in Employment Act and the Americans with Disabilities Act.

In May 2025, the court granted conditional collective action status to the ADEA claims. Mobley amended his complaint in early January to add Hughes, Rowe and Sheilah Johnson-Rocha as named plaintiffs.

Judge Lin was hesitant in January to grant the workers' request for a six-month extension to conduct discovery to support a motion for class certification, questioning whether their attorneys could handle a class that might encompass millions of people. The judge subsequently provided a July 16 deadline for a class certification bid, saying she was still concerned about a lack of discovery progress but that the workers had "nonetheless shown good cause" to modify the case schedule.

A spokesperson for Workday said in a statement to Law360 on Monday that its technology "looks only at job qualifications, not protected traits like race, age or disability," and its products are tested as part of its "Responsible AI" program to ensure they don't harm protected groups.

"Workday's AI recruiting tools don't make hiring decisions in California or anywhere else," according to Workday. "Our customers maintain full control of their hiring processes and our tools are designed with human oversight at their core."

Counsel for the workers did not immediately respond to requests for comment Monday.

The workers are represented by Lee D. Winston and Roderick T. Cooks of Winston Cooks LLC, Robert L. Wiggins Jr., Ann K. Wiggins, Samuel Fisher Jr., Jennifer W. Smith, Nicki L. Lawsen, Lori Kisch, Meredith Burrell, Jennifer M. Swedish and Freddrick M. Moore of Wiggins Childs Pantazis Fisher Goldfarb LLC and Jay Greene of Greene Law Firm PC.

Workday is represented by Julie A. Totten, Erin M. Connell, Kayla D. Grundy and Alexandria R. Elliott of Orrick Herrington & Sutcliffe LLP.

The case is Derek Mobley et al. v. Workday Inc., case number 3:23-cv-00770, in the U.S. District Court for the Northern District of California.

--Additional reporting by Bonnie Eslinger. Editing by Dave Trumbore.

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