AI Hiring Tools and Discrimination Liability in Washington | Mobley v. Workday

AI Hiring Tools and Discrimination Liability

Employers are responsible for hiring decisions whether a person or an AI tool makes them. Washington's Law Against Discrimination applies to employers with eight or more employees, and in Mobley v. Workday a federal court let a nationwide age-discrimination case proceed against the AI vendor itself. Employment practices liability insurance (EPLI) is the policy built for these claims.

By Trella Commercial · Updated October 23, 2026

The short version

The law does not care what tool made the decision. RCW 49.60.180 makes it unfair for an employer to refuse to hire because of age, sex, race, disability, and other protected traits.
Vendors are being sued too. In Mobley v. Workday, the court let claims proceed against Workday as an agent of employers and preliminarily certified a nationwide age-discrimination collective over its AI screening. The case is ongoing; no discrimination has been found.
Federal guidance changed, the laws did not. The EEOC removed its AI hiring guidance in January 2025. Title VII, the ADA, and the ADEA still apply, and private plaintiffs can still bring claims.
EPLI is the main protection. Confirm it covers claims arising from hiring decisions made with AI tools, and check what your vendor contract says.

Mobley v. Workday: what the court has decided

Date	Ruling
July 2024	Disparate impact claims allowed to proceed against Workday as an "agent" of employers (740 F. Supp. 3d 796)
May 16, 2025	Preliminary certification of a nationwide collective of applicants 40 and over, based on a "unified policy" of using Workday's AI to "score, sort, rank, or screen applicants"
June 22, 2026	California (FEHA) claims allowed to proceed; the court explained that under California law a vendor like Workday can be directly liable for its own role in hiring on an employer's behalf. A new race claim and a "Workday as employer" theory were dismissed or struck
July 2, 2026	Workday's request for an immediate appeal denied
Fall 2026	Class certification motion filed September 14, 2026; hearing set for March 9, 2027; no trial, settlement, or finding of discrimination

The case is in federal court in California, but it shows how AI hiring claims are argued: the tool's design becomes evidence, and both the employer and the vendor can be in the case.

How Washington law applies

Rule	What it says	Source
Unfair hiring practice	Employers may not refuse to hire because of age, sex, race, disability, and other protected traits	RCW 49.60.180
Who is an employer	"Employer" includes "any person acting in the interest of an employer, directly or indirectly, who employs eight or more persons"	RCW 49.60.040
Health data	Running consumer health data through an AI tool is processing under the My Health My Data Act	RCW 19.373.010

No Washington court has yet applied the Law Against Discrimination to an AI hiring tool, but nothing in the statute exempts decisions made with software. More in our guide to the Washington Law Against Discrimination.

Other rules to know

Colorado. Colorado replaced its 2024 AI Act with a narrower automated decision-making law (SB 26-189) in May 2026. Starting January 1, 2027, businesses using automated decision technology in consequential decisions such as employment must notify people and explain adverse decisions. It matters if you hire in Colorado.
EU. Under the EU AI Act, AI used in hiring is high risk; those obligations now apply from December 2, 2027.
Federal. Executive Order 14281 (2025) told federal agencies to deprioritize disparate impact enforcement. It cannot change the statutes, and state laws like Washington's still apply.

How EPLI responds

Claim	Covered by	What to check
Rejected applicant alleges the AI screening discriminated	EPLI	Applicants are usually covered claimants; check for AI or algorithm exclusions
Class or collective action over a screening tool	EPLI	Limits and retention; class actions use limits quickly
You want the vendor to share the cost	Your vendor contract	Indemnity scope and liability caps
Regulator or agency charge	EPLI, defense of administrative charges	See responding to an EEOC charge

Steps for employers using AI in hiring

Know what the tool decides. Ranking, filtering, and auto-rejecting carry more risk than scheduling.
Keep a person in the decision and document why candidates were advanced or rejected.
Ask the vendor for its bias testing and what it will cover if a claim is made.
Check your EPLI for AI exclusions and confirm applicants are covered.
Watch Colorado and EU rules if you hire there.

Common questions

Can an employer be sued for discrimination by an AI hiring tool?

Yes. Discrimination laws apply to hiring decisions however they are made, and the employer is responsible for the tools it chooses. In Mobley v. Workday, claims are also proceeding against the vendor.

Does EPLI cover AI hiring discrimination claims?

Generally yes, since EPLI covers discrimination claims by applicants and employees, unless the policy has an AI or algorithm exclusion. Read the policy and endorsements.

Is the EEOC's AI hiring guidance still in effect?

No. The EEOC removed its AI technical assistance documents in January 2025. The underlying laws (Title VII, the ADA, the ADEA) are unchanged.

Did Workday lose the Mobley case?

No. As of October 2026 the court has allowed the case to proceed and preliminarily certified a collective, but there has been no finding of discrimination, trial, or settlement.