A pair of court rulings against Workday has given plaintiffs' lawyers a new avenue for challenging AI-driven employment screening — and the decisions arrive as employers rapidly expand their use of algorithmic tools in hiring.

Law.com reports that the rulings against the HR technology vendor offer job applicants a novel legal path: rather than suing only the employer that rejected them, plaintiffs can target the vendor whose software performed the screening. That shift touches decisions HR teams make every day about which tools to deploy, what vendor representations to secure in contracts, and how to document screening outcomes.

The legal theory matters because Workday-style platforms sit between tens of thousands of employers and millions of applicants. If vendors can be held liable as "agents" of employers in discrimination claims, the compliance calculus changes for both sides of the procurement relationship.

What the rulings change

Until now, rejected applicants who suspected algorithmic bias generally had to identify and sue the specific employer — a barrier when hiring funnels through third-party software and applicants may not know how decisions were made. The rulings against Workday recognize a route around that barrier, allowing claims to proceed against the intermediary vendor.

For employers, the practical exposure runs in two directions. First, plaintiffs may add vendors to litigation, expanding discovery into how screening models were built, trained and validated. Second, employers could face indemnification disputes with vendors over who pays when an algorithm screens out a protected class of applicants.

Questions HR and procurement teams should ask now

Vendor announcements in this space typically emphasize capability; the rulings shift attention to liability and adoption questions. HR leaders procuring AI screening tools can press on several fronts:

• What disparate-impact testing has the vendor conducted, and can it produce documentation of results by race, sex, age and other protected characteristics?
• Will the contract indemnify the employer if the tool produces discriminatory outcomes, or does liability remain with the customer?
• Can the employer audit the tool's decisions, or does the vendor treat the model as a black box?
• What retention and explainability features exist so the employer can defend individual screening decisions years later?

The last question matters most in litigation. Employers bear recordkeeping obligations under employment discrimination law regardless of whose software made the call. If a vendor's system does not generate decision records an employer can produce in discovery, the employer holds the legal risk of that gap.

The broader context

AI screening has spread quickly through high-volume hiring. Tools now parse resumes, rank candidates, conduct video interviews and score assessments — each stage a potential locus for disparate impact claims. The Workday rulings suggest courts are willing to meet that reality by adapting traditional agency theories to algorithmic intermediaries rather than treating vendors as mere software sellers.

The Equal Employment Opportunity Commission has separately signaled attention to AI in hiring, and state laws — including New York City's Local Law 144, which requires bias audits of automated employment decision tools — have imposed audit and notice duties on employers using such systems. Employers operating across jurisdictions face a patchwork: local audit mandates, federal anti-discrimination enforcement and now a plaintiff-side theory aimed at vendors.

What to watch

The immediate question is whether the rulings against Workday survive appeal and whether other courts adopt the same theory. Vendors may respond by rewriting contracts to disclaim agency status and shift liability to customers, which would put the burden back on employers to demand stronger protections during procurement. As AI screening becomes the default in high-volume hiring, the legal exposure attached to these tools — and who ultimately bears it — will be defined in the litigation and negotiation that follow these rulings.