Jul 16, 2026
Months after Meta announced plans to cut roughly 8,000 jobs, the company is facing a lawsuit from 26 employees who allege it relied on artificial intelligence to help determine who would lose their jobs.
The lawsuit, filed in federal court in Oakland, California, alleges Meta used an internal AI system that analyzed employee activity — including keystrokes, AI tool usage and performance rankings — when evaluating workers for layoffs.
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The complaint alleges the AI system disproportionately affected employees who had taken pregnancy, parental or medical leave because their time away from work reduced the activity metrics used to evaluate performance.
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All 26 anonymous plaintiffs took protected leave and requested or received workplace accommodations for disabilities. While they have been notified of their layoffs, their employment is not scheduled to end until July 22.
AI in HR under scrutiny
The lawsuit comes as AI becomes increasingly embedded in the workplace. Gallup found that 41% of employees say their organization has integrated AI tools to improve organizational practices, while regulators are increasingly scrutinizing how employers use the technology in hiring, promotions and layoffs.
In a statement to Moneywise, a Meta spokesperson disputed the allegations, saying: “These claims lack merit and are not based on facts. Workforce management and organizational decisions were and are made by people, not AI.”
According to the complaint, many of the plaintiffs had taken pregnancy, parental or medical leave before being selected for layoffs.
One plaintiff disclosed what the lawsuit describes as a “serious health condition and disability” and received approval for medical leave through Meta’s own provider.
The lawsuit alleges his manager warned that taking leave could result in him being selected for the anticipated layoffs and that the company failed to provide a reasonable accommodation.
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What legal protections exist
The lawsuit further alleges Meta’s layoff process violated several federal and state employment laws, including the Family and Medical Leave Act, the Americans with Disabilities Act, the Pregnancy Discrimination Act and the Pregnant Workers Fairness Act.
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The plaintiffs argue the company’s AI-assisted review process had a “disparate impact” by treating time away on protected medical, parental and pregnancy leave as reduced performance, putting those employees at a disadvantage during layoffs.
Even when discrimination isn’t intentional, workers can challenge workplace policies they believe disproportionately disadvantage protected groups.
“It’s not a magic bullet,” Jeffrey M. Hirsch, a professor of law at the University of North Carolina, told The Wall Street Journal. “On the other hand, it does mean if your employer is picking and choosing who gets laid off, they can’t say that I’m annoyed so-and-so keeps taking FMLA leave,” he added, referring to the Family and Medical Leave Act.
Hirsch said the case also illustrates how companies’ growing use of AI in workplace decisions could expose them to new legal risks if those tools disproportionately affect protected groups.
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While the Equal Employment Opportunity Commission has scaled back enforcement of some disparate impact claims in recent years, workers can still bring those cases in court. Several state laws also prohibit employment practices that disproportionately affect protected groups, even if discrimination was not intentional.
The plaintiffs argue Meta’s AI-assisted selection process disproportionately affected women because they are more likely than men to take pregnancy and caregiving leave.
Is AI evaluating productivity and performance?
The courts will decide whether the plaintiffs’ claims hold up. Regardless of the outcome, the lawsuit underscores a growing challenge for employers as AI takes on a larger role in the workplace.
The shift comes as workers remain uneasy about AI’s expanding role on the job. A 2025 Pew Research Center survey found that 52% of U.S. workers are worried about how AI will be used in the workplace.
Just months ago, companies were embracing what some dubbed “token maxxing,” encouraging employees to use AI for as many tasks as possible. That enthusiasm has since given way to the “Tokenapocalypse,” as some employers pull back over rising computing costs.
Whatever the outcome, the case is likely to test where employers and the courts draw the line as AI takes on a bigger role in workplace decisions.
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Victoria Vesovski is a Toronto-based staff reporter at Moneywise covering personal finance, lifestyle and trending news. She holds degrees from the University of Toronto and New York University, and her work has appeared on platforms including Yahoo Finance, MSN Money and Apple News.
