Meta faces first major US lawsuit over AI use in layoffs
Twenty-six former employees are seeking to block their terminations, alleging Meta used untested AI systems to discriminate against workers on medical leave, a claim that exposes new legal risks for companies integrating AI into workforce management.
Twenty-six Meta Platforms employees have filed a lawsuit in federal court in Oakland, California, accusing the company of using AI-powered software to disproportionately target workers with disabilities or medical leave for mass layoffs. The plaintiffs, whose jobs are scheduled to be eliminated starting July 22, are seeking a preliminary ruling to block their terminations while they pursue private arbitration. The workers argue that while Meta's employment agreements require individual arbitration for workplace disputes, this clause does not apply to requests for temporary court relief.
According to the complaint, Meta used internal AI-assisted systems to score and rank employees on a termination list. The technology included the "Metamate" large language model, an employee-trained "second brain" that tracked communications and documents, and a productivity score derived from scanning keystrokes, screen content, emails, and browser history.
The reductions are part of a broad internal overhaul as Meta increases its AI investments and integrates AI agents into its products and operations. The company laid off nearly 8,000 people, or 10 per cent of its global workforce, in May. Chief Executive Mark Zuckerberg has since stated he does not expect further company-wide layoffs this year.
A new frontier for corporate AI liability
The litigation appears to be the first against a major U.S. company challenging the use of AI in conducting layoffs. The anonymous plaintiffs, spanning six states and the District of Columbia, allege Meta violated federal and state anti-discrimination laws protecting workers with disabilities, those on medical leave, and pregnant employees. They also claim the company failed to test its AI systems for bias, violating recently adopted regulations in California and New York City.
A Meta spokesperson denied the allegations on Tuesday. "Workforce management and organizational decisions were and are made by people, not AI," the spokesperson said.
For investors, the lawsuit highlights a growing regulatory and litigation threat as corporations automate human resources functions. As states enact strict laws requiring bias audits for automated employment tools, tech giants face the risk that efficiency-driven AI rollouts outpace compliance frameworks, potentially resulting in costly legal battles.
