Workday’s position in its court filing was that supplying hiring software did not make it an employer, an employment agency, or an agent subject to federal employment-discrimination liability. Judge Rita F. Lin addressed that argument in her July 12, 2024 order in Mobley v. Workday, Inc., in the Northern District of California. Workday sought dismissal of a rejected applicant’s claims against the company itself.
The order drew a narrower boundary. A vendor can come within those statutes when employers delegate hiring functions to it. The court allowed an agency-based case to proceed. It did not find that Workday had discriminated against Derek Mobley.
What did Mobley allege?
Mobley described himself as a Black applicant over 40 with anxiety and depression. He alleged that employers using Workday’s systems repeatedly rejected his applications. His theory was not simply that employers stored applications in Workday software. He alleged that Workday’s algorithmic tools screened applicants and helped determine which candidates advanced.
That distinction supplied the case’s central legal question. A company that holds an application and a company that evaluates the applicant can occupy different positions under discrimination law, even if both sell software subscriptions.
Workday’s annual report for the fiscal year ended January 31, 2024 describes recruiting within its human-capital-management offering. That establishes the commercial setting, not the challenged conduct. The allegations about screening, recommendations, and rejection came from Mobley’s complaint, as recounted in the order.
The procedural vehicle matters. Federal Rule of Civil Procedure 12(b)(6) permits dismissal for failure to state a claim. Lin was deciding whether Mobley’s allegations supported a legally viable case against this defendant, not choosing between competing expert analyses of an algorithm.
Where does agency enter?
The statutory language does not stop at the company issuing a paycheck. Title VII’s definition of an employer includes an employer’s agent. The Age Discrimination in Employment Act and the Americans with Disabilities Act also include agency language in their employer definitions.
Lin treated that language as consequential. Her analysis asked whether Workday allegedly performed functions that employers had delegated to it. Screening applicants and deciding who should advance are hiring functions. Selling a tool does not necessarily prevent its supplier from performing those functions through the tool.
The Equal Employment Opportunity Commission made the agency argument in its April 2024 amicus brief. The commission argued that an outside company can fall within employment-discrimination statutes when it performs hiring functions for an employer. Lin accepted the essential distinction between an ordinary software supplier and a vendor allegedly acting on an employer’s behalf in applicant selection.
The mechanism was delegation, not artificial intelligence as a special legal category. The statutes supplied the agency language. Mobley’s allegations supplied the claimed hiring role.
Does every software supplier become an employer?
No. Lin did not adopt a rule that every vendor serving a human-resources department inherits the customer’s employment obligations. The order distinguished tools that support employers from tools allegedly performing delegated hiring functions.
That boundary is more specific than whether a product is marketed as AI. An applicant database may store material that an employer evaluates independently. Mobley alleged something further: Workday’s systems participated in evaluating candidates and determining their progression through hiring.
The court also rejected Mobley’s separate employment-agency theory on the allegations before it. That result is easy to miss because an employer’s agent and an employment agency sound interchangeable. They are different statutory routes.
Title VII defines an employment agency by reference to regularly procuring employees for employers or employment opportunities for employees. Agency liability instead concerns acting on an employer’s behalf. Failure to establish the first route did not eliminate the second. Workday won a boundary around one theory, not an exemption from the statutes.
Which discrimination theory survived?
The July order allowed disparate-impact claims under Title VII, the ADEA, and the ADA to proceed. It dismissed Mobley’s intentional-discrimination claims.
Those are different accusations. Intentional discrimination concerns treatment because of a protected characteristic. Disparate impact concerns a challenged practice that produces prohibited unequal effects, subject to the requirements and defenses of the applicable statute. An applicant need not convert every allegation about a selection tool into an accusation that its designers deliberately wanted to exclude a protected group.
Section 1981, another basis for Mobley’s claims, protects equal rights in making and enforcing contracts. The order did not permit him to use that provision as a substitute route for a disparate-impact claim. His allegations did not adequately support the intentional discrimination required for that theory.
The surviving case therefore was not a judicial endorsement of every explanation Mobley offered for his rejections. Lin separated the statutory routes and the kinds of discrimination alleged. Some survived the motion. Others did not.
What would the selection evidence need to show?
For a Title VII disparate-impact claim, the statute requires a connection between a particular employment practice and the unequal impact alleged. It also provides a defense based on job relatedness and business necessity, alongside provisions addressing alternative employment practices.
The EEOC’s employment-testing guidance applies that framework to tests and selection procedures. It expressly warns that vendor documentation does not relieve an employer of responsibility for ensuring that its selection procedures satisfy the law. Buying the assessment does not settle whether its use is lawful.
The Uniform Guidelines on Employee Selection Procedures provide a further evidentiary framework. They address adverse impact, validation, and records concerning selection procedures. The relevant material is not merely a product’s description. It includes how a procedure selects people and what supports its relationship to the work.
Mobley’s repeated rejections were allegations about his experience. Establishing an unlawful selection practice requires the additional connections demanded by the statute. The legal theory reaches the vendor; the selection evidence must establish the violation.
Do age and disability follow the same rule?
Not exactly. The ADEA protects people who are at least 40, but its disparate-impact framework is not simply Title VII with a different protected characteristic. The statute recognizes differentiation based on reasonable factors other than age. The EEOC’s implementing regulation explains that defense and assigns the burden of proving it to the employer.
The ADA separately addresses qualification standards, employment tests, and other selection criteria that screen out people with disabilities. Its text provides a job-relatedness and business-necessity standard, along with obligations concerning reasonable accommodation.
Those differences matter because Mobley brought claims involving race, age, and disability. A finding about one protected group or one statutory defense would not automatically dispose of the others. The July order opened the agency route under each statute; each claim retained its own requirements.
Can the vendor label end the case?
No. Workday cannot defeat hiring-discrimination claims merely by describing its business as software. The July 2024 order makes the alleged function decisive: a vendor that performs delegated applicant selection can fall within an employer’s statutory agency relationship. Workday’s categorical defense failed because supplying technology and acting in hiring are not mutually exclusive.
