In the closely watched case Mobley v. Workday, the Northern District of California recently granted preliminary certification of a collective action for age discrimination claims against Workday’s AI-based applicant recommendation system. The court’s order allows the plaintiff to notify similarly situated individuals of the lawsuit and give them an opportunity to opt-in to having their claims heard collectively.
This could result in one of the largest collective actions ever certified – in fact, Workday represented in their filings that they had approximately 1.1 billion applications rejected through their system during the applicable time period. Workday also argued that the decision could result in the need to send notices to potentially “hundreds of millions” of users.
The following provides a summary of the case, the legal questions involved in the certification decision, the Court’s ruling, and implications for employers and vendors utilizing AI hiring tools.
What is the case about?
Plaintiff Derek Mobley brought this case against Workday—a cloud-based software vendor that provides global human resources services to employers—alleging its AI-based job applicant screening tools violate federal and California anti-discrimination laws. He alleged Workday’s applicant recommendation system discriminated against job applicants based on race, age, and disability. Mobley, an African American man over forty years old with anxiety and depression, claims that he did not receive a single job offer after applying to over 100 positions with companies that use Workday’s screening tools.
Last July, the Court granted in part and denied in part Workday’s motion to dismiss the case which we analyzed here. The Court dismissed Mobley’s intentional discrimination and aiding and abetting claims under California’s anti-discrimination law, but allowed Mobley’s disparate impact discrimination claims to proceed on an “agency” theory of liability.
In February 2025, Mobley moved for preliminary certification of a collective action for his disparate impact claim under the Age Discrimination in Employment Act of 1967 (ADEA). Under the ADEA, plaintiffs may bring a collective action on behalf of other individuals under a procedure in the Fair Labor Standards Act (FLSA). This procedure allows the lead plaintiff to seek preliminary certification of a collective to send court-approved notice to individuals who may then join, or “opt-in” to, the litigation.
What legal issues were involved?
Mobley sought to certify a collective of all individuals aged 40 and over who applied for job opportunities using Workday’s job application platform and were denied employment recommendations. In support of the motion, Mobley provided declarations of four opt-in plaintiffs over the age 40 who similarly claimed to have been rejected nearly every time after submitting hundreds of applications through Workday’s system.
The Court’s decision to grant preliminary certification hinged on whether Mobley had sufficiently alleged that the proposed collective of job applicants was “similarly situated.” Because the term “similarly situated” is not defined by statute, courts have formulated different standards to determine whether collective certification is warranted.
The Ninth Circuit, where the Court sits, applies a two-step process in deciding whether collective action members are “similarly situated.” In the first step, a plaintiff may obtain preliminary certification of the collective if he or she plausibly alleges that legal or factual similarities material to the claims exist across the collective. The plaintiff’s burden of proof at this first step is relatively low in the Ninth Circuit. If preliminary certification is granted, the defendant may then seek to decertify the collective in the second step of the process after the close of relevant discovery. At that stage, courts will “take a more exacting look” at the allegations and record to determine if the collective is similarly situated.
What did the Court rule?
Here, the Court granted the motion for preliminary certification by applying the more lenient standard of the first step under the Ninth Circuit’s two-step approach. It found the proposed collective is similarly situated as Mobley substantially alleged the existence of a unified policy—the use of Workday’s AI tools to screen job applicants—as the source of the alleged discriminatory impact on applicants over forty. The Court emphasized that the collective need not be identical in all respects and found that because the collective members were all allegedly required to compete on unequal footing due to Workday’s discriminatory AI recommendations, they were similarly situated.
To reach its decision, the Court rejected several of Workday’s arguments:
- Plaintiff’s burden at the first step: Workday first contended that Mobley should be held to a higher burden of proof at the first stage of the “similarly situated” analysis because the parties had already engaged in some discovery. Workday reasoned that because some discovery had already been exchanged, Mobley should be required to rely more on evidence, rather than his pleadings, to show the putative collective was similarly situated. The Court rejected this argument as inconsistent with the Ninth Circuit’s two-step approach to collective certification, which poses a lesser burden of proof, akin to a “plausibility standard,” for plaintiffs at the first step. The Court therefore analyzed Mobley’s motion under the “substantial allegations” of similarity standard adopted by the Ninth Circuit.
- Non-existence of employment recommendations: Turning to the “similarly situated” analysis, Workday first argued that the proposed collective had no members because Workday’s systems do not offer “employment recommendations” and therefore, no one had been “denied employment recommendations” by Workday as assumed by the proposed collective. The Court rejected this argument on the basis that Workday’s website and discovery responses suggested that its screening tools did in fact provide recommendations, classifying candidates as “strong,” good,” “fair,” and “low.” Although the Court noted some uncertainty as to how it could differentiate between applicants who were and were not “recommended” based on Workday’s screening tools, it concluded that such questions on how to identify collective members did not preclude preliminary collective certification at the first step.
- Lack of a uniform policy: Workday next argued that Mobley had failed to demonstrate the existence of a uniform policy given that (1) employers (i.e., Workday clients) could choose whether or not to use Workday’s AI features, and (2) the impact of Workday’s AI features varied across different employers. On the first point, the Court found that by defining the proposed collective to those who were “denied employment recommendations” by Workday, Mobley had only included applicants who had applied to employers using Workday’s AI tools. On the second point, the Court found that the employer variables within Workday’s AI tools may be relevant to the merits of Mobley’s disparate impact claim but did not defeat the existence of common issues. According to the Court, common proof could show how Workday’s AI recommendation system worked and the extent to which any disparate impact was driven by employer preferences rather than Workday’s own algorithms.
- Variations in the collective: Workday also argued that the collective was not similarly situated because of varied characteristics across the proposed collective members. As examples, Workday noted that Mobley and the opt-in plaintiffs did not meet the qualifications for every job they were rejected from, sometimes omitted their age from applications, and received some interviews or job offers via their applications through Workday. The Court rejected this argument by, again, relying on the Ninth Circuit’s lenient burden on plaintiffs to satisfy the first step of the similarly situated analysis. The Court found that Mobley had met his burden by identifying legal or factual similarities material to the case and that although he may face challenges in proving a disparate impact based on the differences Workday identified, that was a merits question to be resolved at the second step.
- Limits on the collective: Finally, the Court rejected Workday’s argument that the only applicants entitled to join the collective were those who applied to a high number of jobs, met minimum qualifications for every job application, and had a zero percent success rate. The Court reasoned that it was unnecessary to examine such details to determine members of the collective because whether Workday’s AI system had a disparate impact was a question that could be addressed across the collective, not on a member-by-member basis. The Court further reasoned, under Supreme Court precedent, that applicants do not need to show they were qualified, got rejected, or would have likely been hired to have standing to bring a disparate impact claim for injunctive relief.
Where will the case go from here?
Although the Court granted preliminary certification to trigger notice of the lawsuit to individual collective members, it recognized that issues remained as to how the collective would be defined, the feasibility of providing such notice, and the language used in the notice.
On the first issue, the Court qualified the collective definition but directed the parties to confer on additional clarifications as to what rank, score, or grouping would constitute a “recommendation” to not hire.
On the feasibility question, the Court dismissed Workday’s claim that collective notice was inappropriate because it could invite hundreds of millions of claims based on 1.1 billion applications being rejected during the relevant time period. Nevertheless, the Court directed the parties to confer and engage in additional discovery on what data Workday could provide to better identify the individual members of the collective that would receive notice.
Lastly, the Court ordered the parties to confer and submit briefs on any disagreements over the notice plan and contents of the proposed notice.
What are the implications for employers and service providers?
The Court’s decision has significant implications for employers and service providers who use or provide AI tools to screen job applicants and handle other employment-related decisions. Just as the Court’s earlier decision on Workday’s motion to dismiss handed plaintiff’s attorneys a blueprint for surviving the pleading stage with similar claims, so too does this recent decision provide a roadmap to obtain preliminary certification of a collective action that could see thousands of individual opt-in plaintiffs filing claims. The magnitude of such legal risks (and associated exposure) is significantly increased where, as here, courts follow the more lenient standard for granting preliminary certification of a collective based largely on the pleadings.
This decision also serves as an important reminder that disparate impact claims are still alive and well despite the Trump Administration’s recent efforts to renounce that theory of discrimination and divert the EEOC’s investigative focus away from such claims. Employers and agents of employers should recognize that Title VII and decades of court precedent still support disparate impact claims and that, based on this California decision, such claims may have particular success when they involve the perceived discriminatory outcomes of AI systems used in hiring.
To avoid these risks employers should conduct thorough audits and validations of AI systems currently in use or contemplated to ensure compliance with anti-discrimination laws. Such audits and assessment are already required in New York City and will soon be required in Colorado. Vendor contracts and terms of service entered by employers for AI tools should also be scrutinized for indemnification or liability-shifting provisions that may become essential if the tool becomes the subject of discrimination claims and litigation.
Summer associate Pema St. Germain assisted with the development of this post.
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