On June 22, 2026, a federal judge rejected Workday’s argument that its potential liability under California’s Fair Employment and Housing Act (FEHA) necessarily depended on its customers’ liability. The plaintiffs alleged that Workday’s tools, operated from California, actively screened applicants. That alleged conduct supplied a basis for claims against Workday itself.
The applicants sought jobs with Workday’s customers. Their lawsuit nevertheless raised a question about the vendor: when software performs part of the hiring process, whose conduct is being examined?
The ruling allowed California claims to proceed. Its reasoning matters before any finding of discrimination. Performing a function on an employer’s behalf can bring a vendor’s own conduct within the law.
The Screening Happened Before an Interview
Derek Mobley alleged that he applied for more than 100 jobs through employers using Workday’s platform and was rejected every time. In one instance, according to the court’s July 2024 account of his allegations, he applied shortly before 1 a.m. and received a rejection less than an hour later.
Mobley alleged discrimination based on race, age, and disability. The screening tools allegedly determined who advanced and who was rejected. Those were allegations, not established findings about how any particular application was processed.
A hiring process can exclude a person well before a manager conducts an interview or makes a final selection. If an automated screening step prevents an applicant from reaching that manager, examining only the eventual hiring decision leaves an earlier decision unexplained.
That is why the vendor’s role matters. Calling the product recruitment software does not identify what happens between submission and rejection. The relevant inquiry concerns the work the product performs and the responsibility delegated to its provider.
The Court Had Already Distinguished Tools From Delegated Functions
The July 12, 2024 ruling permitted an agency theory under federal discrimination law. It distinguished software that merely implements an employer’s instructions from tools alleged to participate in screening decisions. Its examples included an employer using a spreadsheet to filter applicants by age and an email service delivering rejections. Supplying those tools would not, by itself, make their providers hiring agents.
The court treated the allegations against Workday differently because they concerned delegated hiring functions. The method of performing those functions, including automation, did not itself remove them from discrimination law.
This was not a rule that every software supplier becomes responsible for every customer decision. The distinction turns on participation in the regulated activity. The same purchase can involve a supplier’s technology, an employer’s criteria, and several separate decisions. Identifying those contributions is necessary before assigning responsibility.
California Law Already Recognized Responsibility for an Agent’s Own Conduct
The June ruling drew on the California Supreme Court’s 2023 decision in Raines v. U.S. Healthworks Medical Group. That case involved a business providing preemployment medical screenings, rather than AI. The court held that an employer’s business-entity agent with at least five employees can face direct FEHA liability in appropriate circumstances when it performs activities regulated by the statute on the employer’s behalf.
That reasoning does not erase the employer’s obligations. It allows another entity to be held accountable for its own conduct. A business serving multiple employers can also be positioned to prevent the same unlawful practice from recurring across customers.
The legal foundation therefore predates the current AI debate. The question is how an established rule about delegated work applies when software performs that work.
June Addressed the Vendor’s Connection to California
In the June 22 order, the court found sufficiently pleaded allegations that Workday designed, maintained, and operated the challenged tools from California. It rejected Workday’s contention that an out-of-state employer’s position necessarily determined the vendor’s FEHA exposure. The vendor’s own alleged California conduct required separate analysis.
This was a ruling on a motion to dismiss, granted in part: the court dismissed the separate theory that Workday acted as the applicants’ own direct employer. The court did not find discrimination or decide contractual indemnification. It determined that the allegations could support the California claims. The geographic connection and the vendor’s alleged participation were essential to that determination.
That boundary makes the ruling more useful, not less significant. It identifies a legal defense that failed without pretending that the evidence has already established the plaintiffs’ case.
