Meta layoffs: Instagram parent sued over claims AI unfairly targeted employees on medical leave

Meta is facing legal scrutiny over allegations that artificial intelligence played an unfair role in selecting employees for layoffs, with a group of workers claiming the company's internal systems disproportionately affected those with disabilities or those who had taken legally protected medical leave.

The lawsuit, filed on Monday in a federal court in Oakland, California, has been brought by 26 current and former Meta employees working in managerial, engineering, scientific and research roles. The plaintiffs argue that AI-powered workplace monitoring tools used by the company failed to account for legitimate absences, resulting in lower performance assessments that ultimately influenced redundancy decisions.

The case comes as major technology companies increasingly rely on AI to evaluate productivity and streamline operations, raising fresh questions about whether automated systems can make employment decisions without reinforcing existing biases.

Employees allege AI-based evaluations led to unfair treatment

According to the complaint, Meta relied on a combination of internal AI systems and digital activity metrics while identifying employees for job cuts earlier this year. The lawsuit references an internal bot known as "Metamate", AI assistants trained using employee knowledge, AI usage dashboards, and workplace activity data, including keystrokes and computer usage patterns.

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The plaintiffs argue that these systems effectively measured productivity based on digital activity without recognising that some employees were absent because they were on approved medical or disability leave. As a result, workers exercising their legal rights allegedly received lower rankings, making them more vulnerable during the company's restructuring.

The lawsuit further claims Meta compiled termination rankings using information such as keyboard activity, browser history, emails and screen content. Employees who had logged fewer working hours because of authorised leave allegedly appeared less productive than colleagues, despite their absences being protected under employment law.

The workers contend that these practices violated federal and state laws designed to protect employees from discrimination or retaliation linked to disability, pregnancy or medical leave. They have also alleged that Meta did not adequately test its AI-based systems for bias, potentially breaching newer AI-related legislation introduced in jurisdictions including California and New York City.

The plaintiffs are asking the court to prevent Meta from completing the disputed layoffs while their individual employment disputes proceed through arbitration.

Meta rejects allegations as AI scrutiny grows

Meta has denied that artificial intelligence was responsible for making workforce decisions.

Responding to the allegations, a company spokesperson told the New York Post: "Workforce management and organizational decisions were and are made by people, not AI." Reuters first reported details of the legal case.

The lawsuit follows one of the largest rounds of job cuts in Meta's history. Earlier this year, the company eliminated around 8,000 positions—close to 10 per cent of its global workforce—while simultaneously reassigning roughly 7,000 employees to AI-focused roles as part of chief executive Mark Zuckerberg's strategy to accelerate the company's artificial intelligence ambitions.

Meta has also significantly increased spending on AI infrastructure, forecasting between $125 billion and $145 billion in capital expenditure this year. Much of that investment is earmarked for expanding data centres and securing advanced semiconductor hardware needed to train and run increasingly powerful AI models.

The legal challenge arrives amid a broader shift across the technology industry, where companies are embracing AI while simultaneously reducing headcount. According to outplacement firm Challenger, Gray & Christmas, the technology sector has accounted for nearly one-third of all announced job cuts this year, with AI cited as the leading reason behind layoffs for the fourth consecutive month in June.

The Meta lawsuit could become an important early test of how courts view the growing use of AI in workplace management. If the case proceeds, it may also shape future expectations around transparency, bias testing and accountability when companies deploy AI tools to support employment decisions that have significant consequences for workers.