Meta's latest layoffs are turning into a courtroom fight over whether AI can fairly judge employees who step away from work for medical treatment, disability, or parental leave.
Twenty-six current and former Meta employees have sued the company, alleging that AI-assisted workplace analytics and productivity metrics unfairly penalized workers who took legally protected medical, disability, family, or parental leave during the company's latest layoffs.
Meta has denied the allegations, saying workforce management and organizational decisions were made by people, not AI.
A layoff that led to a lawsuit
The lawsuit alleges Meta increasingly relied on AI-powered workplace tools and automated productivity metrics when evaluating employees during its latest workforce reduction. Citing the 71-page lawsuit, Courthouse News Service stated that the complaint references several internal AI systems, including Meta's employee chatbot, Metamate; AI agents developed by staff; and dashboards tracking AI adoption and token usage.
The plaintiffs argue those metrics failed to account for workers on legally protected medical, disability, family, or parental leave. As a result, employees who spent time away from work allegedly generated fewer productivity signals and lower activity scores, which the plaintiffs say made them appear less productive than colleagues who remained active.
Although the lawsuit was filed on Monday in a federal court in California, the 26 unnamed plaintiffs all come from Meta offices in Florida, Illinois, New York, Pennsylvania, Washington, and California.
The plaintiffs ask that Meta be blocked from completing the layoff by July 22 while they seek private arbitration and that records used in the layoff selection process be preserved for an independent audit.
A Meta spokesperson told CNBC that the allegations "lack merit and are not based on facts." The spokesperson added that “workforce management and organizational decisions were and are made by people, not AI.”
Meta’s internal use of AI comes back under the spotlight
Although the allegations remain in court, the claims come as Meta continues to expand AI across its operations, including how employees work.
Earlier this year, the company accelerated its internal AI push by designating some staff to dedicated AI positions. Around the same period, Meta also developed an internal AI tool that trains on employees' workplace data and interactions, despite protests from staff. The company, however, paused the project after reports of sensitive data exposure emerged.
Those developments are not part of the lawsuit. However, they provide context for the company's broader push to integrate AI into internal operations.
The broader implication of this lawsuit
The outcome of the lawsuit could also have implications well beyond a single company's layoffs. Enterprises adopting AI for employee evaluations, performance management, or workforce planning may come under greater scrutiny over whether those systems have been tested for bias and whether human oversight remains meaningful.
Outside the US, governments are also tightening employment protections. Similar debates are emerging internationally as governments update workplace protections for AI-assisted decision-making.
Singapore's Workplace Fairness Act, for instance, establishes clearer safeguards against workplace discrimination. While the Act does not specifically address AI, employers using automated tools may increasingly be expected to ensure that those technologies do not produce unfair outcomes.
As AI becomes more deeply embedded in workforce management, questions about transparency, bias, and accountability are likely to become just as important as the technology itself.
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