Meta to proceed with mass layoffs as judge rejects workers' AI bias challenge

Meta Platforms has cleared a key legal hurdle in its latest workforce reduction after a US federal judge declined to block the company from proceeding with layoffs challenged by a group of employees alleging AI-powered tools unfairly influenced the selection process.

According to Reuters, US District Judge William Orrick ruled on Friday that 26 current and former Meta employees had not demonstrated the "irreparable harm" required to justify an emergency order stopping the layoffs. The ruling allows Meta to continue with job cuts scheduled to begin on 22 July, while the underlying claims move through private arbitration.

The decision comes as the social media company continues a broader restructuring tied to its AI strategy.

Court refuses to pause job cuts

The lawsuit centres on Meta's latest workforce reduction announced in May, when the company notified nearly 8,000 employees, or about 10% of its global workforce, that their roles would be eliminated as it increased investment in artificial intelligence.

The 26 workers sought a temporary restraining order to prevent Meta from completing the layoffs while their claims were heard.

Judge Orrick rejected the request, saying the employees had not shown losing their jobs would cause the type of irreversible damage required to justify emergency court intervention, Reuters reported.

The judge did, however, indicate he could revisit aspects of the case if additional evidence emerges regarding how AI was used in the layoff process. A separate request for a preliminary injunction remains pending.

Workers question AI's role in layoff decisions

At the heart of the dispute is whether AI-assisted performance measurements placed certain employees at a disadvantage.

According to the lawsuit, Meta relied on internal AI tools that assessed:

• Employee productivity
• AI token usage
• Performance reviews linked partly to AI adoption

The plaintiffs allege these measures disadvantaged employees who were on protected medical leave, caring for family members or living with disabilities because they could not generate the same performance signals as colleagues who remained actively at work.

The lawsuit also claims Meta used internal systems including "Metamate", a large language model assistant, an employee-trained knowledge system described as a "second brain", and productivity scores derived from activity such as keystrokes, screen content, emails and browser history.

The employees further allege these systems continued recording reduced activity during legally protected leave, lowering AI-related performance scores used in layoff decisions.

According to Reuters, the case appears to be the first lawsuit against a major US company challenging the alleged use of AI in conducting layoffs.

Meta maintains humans made the decisions

Meta has denied wrongdoing throughout the proceedings.

According to Reuters, the company said workforce decisions were made by people rather than AI.

The company declined further comment following Friday's ruling.

During the court hearing, lawyers representing Meta also maintained employees were losing employer-subsidised health insurance rather than healthcare coverage altogether. They argued any financial losses could be addressed later if the employees ultimately succeed in arbitration.

Lawyers representing the workers said the court nevertheless recognised the lawsuit raises "serious questions" about Meta's conduct and noted the judge left open the possibility of reconsidering aspects of the case if more evidence about AI's role becomes available.

A case with wider implications

The lawsuit arrives as employers increasingly integrate AI into workforce management and performance evaluation.

While the immediate dispute concerns Meta's layoffs, legal experts will be watching closely because the case tests whether AI-assisted employment metrics can expose companies to discrimination claims when protected absences affect measurable productivity.

The plaintiffs, who include engineers, managers, researchers and designers, remain on Meta's payroll until their termination dates but lost access to company systems in May and have not performed work since then, according to court filings cited by Reuters.

Most employment disputes covered by arbitration agreements proceed individually rather than through court litigation. The Meta employees contend their agreements do not prevent them from seeking temporary court intervention while arbitration continues.

For now, Meta's layoff plans remain on track. The broader legal questions surrounding AI's role in workforce decisions will continue through private arbitration and potentially further court proceedings.