Workday AI Screening Lawsuit Could Raise Compliance Risks for Banks

As artificial intelligence becomes more widely used in human resources, software giant Workday faces a class-action lawsuit alleging algorithmic discrimination in its applicant-screening tools. About 80% of U.S. employers use this type of software, including Bank of America and Wells Fargo. The case could clarify whether liability for AI bias rests with software developers or the companies that deploy their products, exposing financial institutions that rely heavily on automated systems to unprecedented compliance risks.

In the latest development, a judge in the U.S. District Court for the Northern District of California denied Workday’s motion to dismiss the lawsuit on June 22, 2026. The judge ruled that the plaintiffs could proceed with allegations that factors such as gaps in résumés were used as proxies for discrimination. The court had previously granted class certification in May 2025, allowing job applicants aged 40 or older who had been rejected through the software since September 2020 to join the case. The lawsuit has now formally entered the discovery phase.