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AI on Trial: What the Workday Lawsuit Means for HR’s Future

Fast-growing technology is relying on artificial intelligence to improve its services. Today, AI is the backbone of modern human resources—screening resumes, automating HR tasks, and even predicting employee attrition before it happens.

For HR professionals, the Workday lawsuit is much more than a headline—it’s a wake-up call. The case is prompting organizations to scrutinize not only their use of AI but also their vendor relationships, and ultimately, their commitment to fair and ethical hiring practices.

The Lawsuit: What Happened?

In 2025, a group of job seekers took Workday to federal court. They claimed that the company's software—powered by AI algorithms—was not doing a fair job of deciding who should move forward in the hiring process. According to the plaintiffs, the software produced discriminatory results, particularly harming Black applicants, older workers, and people with disabilities.

The lawsuit claims Workday is responsible under federal civil rights laws for enabling bias in hiring, even if that bias is unintentional. (See AI on Trial: Implications of the Workday Lawsuit for Employers)

Why This Matters: Compliance, Risk, and Trust

AI hiring tools often promise to eliminate human bias, but bias can sneak in through training data or system design flaws. The Workday case underscores the growing legal expectation that companies must proactively audit their AI for potential disparate impact, rather than relying solely on vendor assurances.

Here’s what’s at stake:

1. Legal Exposure Extends to Employers
Even if you use a third-party vendor like Workday, your organization is still responsible for complying with anti-discrimination laws like Title VII, the ADA, and the ADEA. “We didn’t build it” is not a defense.

2. Auditability and Explainability
A problem arises when your AI cannot clarify how it makes decisions. The EEOC, Department of Justice, and other agencies have issued guidance recommending employers audit algorithms for bias and ensure transparency in automated decision-making.

3. Reputation and Candidate Experience
Beyond legal risks, there’s the business risk: If applicants see your selection process as biased, your employer brand can suffer. In today’s market, top candidates have choices, and fairness matters.

What Should HR Professionals Do Now?

The lawsuit against Workday shouldn’t prompt HR to ditch all AI tools, but it should motivate every team to create a thoughtful plan. Here’s how to get started:

1. Examine Your Technology
Partner with your IT and procurement teams to conduct a comprehensive inventory of all AI-powered tools utilized in the hiring process. Ensure that each AI solution is trained using accurate and relevant data that reflects your organization. Engaging qualified AI consultants to assist with data preparation and model validation is a recommended best practice. This proactive approach supports effective risk management and promotes fair, reliable outcomes.

2. Conduct Regular Bias Audits
Set a routine for internal or third-party audits to look for signs of disparate impact. Don’t treat this as a “set and forget” compliance checkbox—review regularly, especially if you change hiring processes or data sources.

3. Refresh Your Candidate Communication
Be transparent with candidates about the use of AI in hiring. Transparency builds trust, even when automation is involved.

4. Involve Legal Early
Before launching new AI features, consult legal counsel on potential risks. Ensure that your vendors also collaborate with your legal team—compliance and fairness are a team effort.

5. Stay Up to Date on Regulations
Laws around AI in employment are evolving fast. States and cities (like New York City and Illinois) already require algorithmic bias audits or candidate notification.

The Takeaway

The Workday case is a call to action for HR leaders. Embracing AI isn’t just about innovation or efficiency—it’s about responsibility. The organizations that lead in ethical AI and transparency will not only stay compliant but also build the trust that defines the future of hiring.

Further reading:

• AI on Trial: Implications of the Workday Lawsuit for Employers (JD Supra)

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