Workday to face trial over AI bias in hiring screening tools

A federal court in California denied Workday's motion to dismiss and ordered the company to answer charges that its AI-powered resume screening tools operate in a discriminatory manner. The plaintiff alleges that the platform's algorithms disproportionately rejected older applicants, certain ethnic groups, and people with disabilities during automated filtering. Workday argued it was merely a software vendor rather than an employer, but the court rejected that defense. The ruling establishes an important legal precedent: developers of AI hiring tools can now face liability on par with the employers who use them. For investors, this signals growing regulatory and litigation risk across the entire HR-tech sector, which could weigh on valuations.