AI “Agency” Liability: The Workday Wake-Up Call?

In Derek Mobley v. Workday, Inc., A federal court California recently allowed a lawsuit to continue against Workday, a human resources (HR) technology vendor, for potential discriminatory hiring practices stemming from an employer’s use of Workday’s HR artificial intelligence (AI) technology. The court held that an employer’s use of Workday’s HR AI technology in hiring decisions could potentially create direct liability to Workday, not just the employer, under an “agency” theory [1].

Traditionally, agency relationships involve human beings acting on behalf of another. By extending this concept to AI, the court opened an avenue for holding technology providers accountable for the actions of their AI technology in the HR context. As noted by the court [2]:

The [Plaintiff] plausibly alleges that Workday's customers delegate traditional hiring functions, including…