IN THIS ISSUE

FEDERAL FUNDING & OVERSIGHT

UC Unions Sue Trump Administration Over “Financial Coercion”

• UC employees, unions sue Trump administration over ‘financial coercion’ 
• Judge orders Trump administration to restore $500 million in federal grant funding to UCLA

OVERVIEW

On September 19, 2025, the University of California’s largest labor unions, including the University Professional and Technical Employees (UPTE) and the American Federation of State, County and Municipal Employees (AFSCME), filed a federal lawsuit against the administration alleging “financial coercion.” The unions argue that the administration’s decision to suspend federal research and student aid funding to UCLA—following findings of alleged Title VI violations—constituted an unlawful attempt to pressure the institution into compliance with political directives.

This lawsuit follows a ruling earlier this month in which a federal district court ordered the restoration of approximately $500 million in suspended UCLA grants, citing constitutional concerns over the administration’s actions. The court found that the Department of Justice had exceeded its authority by freezing funds without due process or clear statutory authorization.

The unions’ suit claims that the suspension not only undermined UCLA’s academic mission but also harmed tens of thousands of workers, with federal research grants essential to sustaining jobs, health benefits, and student support services across the UC system.

LEGAL INTERPRETATION

The unions’ lawsuit challenges whether the federal government can suspend research and student aid funding absent clear statutory authority. Earlier this month, a federal district court ordered the restoration of $500 million in UCLA grants, finding that the Department of Justice exceeded its authority and raised due process concerns by freezing funds without established procedures.

By linking federal funding to disputed findings of Title VI violations, the administration’s actions raise questions under the Spending Clause, which limits the federal government’s ability to use financial pressure to compel compliance. The unions further argue that conditioning funding on the elimination of DEI programs constitutes unconstitutional financial coercion under the Tenth Amendment and infringes the First Amendment by suppressing academic freedom and protected expression.

The case could clarify the boundaries of executive power over federal grants, including whether the administration may leverage funding to compel institutional compliance with contested policy directives

BRIDGE POV
The UCLA funding dispute and the unions’ lawsuit illustrate the growing use of federal dollars as a political lever. By conditioning access to grants on contested interpretations of Title VI and the elimination of DEI programs, the administration is testing the limits of executive authority while placing universities, workers, and students at risk.

The case also adds a new dimension to the broader conflict between higher education and the administration, underscoring how disputes over DEI, antisemitism, and campus protests now threaten not only institutional governance but also workforce stability and long-term funding streams.
 

ACTIONABLE STRATEGIES

1. Assess Vulnerability to Political Leverage: Review how federal funding intersects with research, student aid, and workforce programs. Identify where political disputes could disrupt critical operations.
    
2. Safeguard Workforce and Academic Continuity: Prioritize protections for employees, students, and research tied to federal dollars. Build contingency plans that sustain both mission and workforce stability during funding disputes.
    
3. Strengthen External Alliances: Engage state partners, philanthropic funders, and industry collaborators to diversify support. Reinforce that commitments to equity, research, and innovation remain intact even under federal pressure.

COURTS & LITIGATION

Federal Court Lets Age-Bias Claims Against Workday’s AI Hiring Tools Proceed in Landmark Test of Algorithmic Screening

• Derek Mobley V. Workday, Inc.

OVERVIEW

On September 25, 2025, the U.S. District Court for the Northern District of California ruled that a class-action lawsuit alleging bias in Workday’s AI hiring tools may proceed. The case began in February 2023, when Derek Mobley—a Black job seeker over 40 with disabilities—filed suit claiming that Workday’s applicant screening system systematically excluded candidates based on age, race, and disability.

Plaintiffs argue that these practices violated the Age Discrimination in Employment Act (ADEA), Title VII of the Civil Rights Act, and the Americans with Disabilities Act. The Equal Employment Opportunity Commission (EEOC) filed an amicus brief supporting the plaintiffs, underscoring the case’s significance for federal enforcement priorities. Workday had sought dismissal, asserting that as a software vendor it was not the employer responsible for hiring decisions. The court rejected that defense at this stage, holding that discovery should proceed on whether Workday can be held liable under civil rights statutes.

The ruling positions the case as a landmark test of how anti-discrimination laws apply to artificial intelligence systems that increasingly shape employment decisions.
 

LEGAL INTERPRETATION

The Workday lawsuit presents a novel test of how civil rights statutes apply to artificial intelligence in hiring. Traditionally, claims of discrimination under the Age Discrimination in Employment Act (ADEA), Title VII, and the Americans with Disabilities Act (ADA) have been directed at employers. Here, the plaintiffs allege that Workday’s algorithmic screening tools themselves functioned as gatekeepers, disproportionately excluding older, Black, and disabled applicants.

At the motion-to-dismiss stage, Workday argued it should not be liable because it is a technology vendor, not the employer making hiring decisions. The federal district court rejected that defense, finding that the plaintiffs plausibly alleged Workday exercised sufficient control over the hiring process to be subject to anti-discrimination law. The EEOC’s 2024 amicus brief reinforced this view.

If upheld, the case could expand the scope of civil rights enforcement by confirming that technology providers, not just employers, may face liability when algorithmic systems produce discriminatory effects. It will also clarify how courts interpret the intersection of established employment law and emerging AI-driven hiring practices.

BRIDGE POV
The Workday case illustrates how civil rights law is being applied to artificial intelligence in hiring. The EEOC, in a 2024 amicus brief, signaled that algorithmic systems producing discriminatory outcomes can trigger liability under Title VII, the ADEA, and the ADA. That position underscores that inclusion in AI is not political, but a legal safeguard against bias.

By contrast, the current administration has advanced an opposing policy posture, seeking to strip DEI considerations from AI systems through its “Preventing Woke AI” executive order as reported in Issue 23. Together, these developments highlight the tension between long standing enforcement priorities and emerging federal directives, with courts now positioned to determine how civil rights law applies in practice.
 

ACTIONABLE STRATEGIES

1. Review AI Use in Employment Decisions and Vendor Practices: Audit where algorithmic tools are deployed in recruiting, hiring, and promotion. Document how they screen candidates and whether they create adverse impact for protected groups. Ensure contracts and oversight mechanisms with vendors address compliance with Title VII, the ADEA, and the ADA.
    
2. Align AI Governance With Civil Rights Law: Develop AI policies grounded in Title VII, the ADEA, and the ADA. Incorporate fairness testing, transparency requirements, and accountability mechanisms that can withstand EEOC and judicial scrutiny.
    
3. Build Inclusive Design Into AI Systems: Work with vendors and internal teams to ensure AI models are designed to expand opportunity and reduce bias, not reinforce it. Treat inclusion as a compliance safeguard rather than an optional value.
    

See also: Trump Issues Executive Order on the Use of DEI in AI (Issue #23)

COURTS & LITIGATION

Danaher and Pall Corp. Face Lawsuit Alleging Unlawful Hiring Quotas

• Critelli v. Danaher 

OVERVIEW

On September 23, 2025, a federal lawsuit was filed against Danaher Corporation and its subsidiary, Pall Corp., alleging that the companies embedded unlawful quotas into hiring and promotion systems under the banner of diversity, equity, and inclusion (DEI). The complaint, filed in the U.S. District Court for the Southern District of New York, claims that Danaher and Pall structured recruitment and advancement processes to meet race- and gender-based targets that disadvantaged other applicants.

The plaintiffs, longtime engineers over the age of 40, allege that the company required managers to ensure that half of all interview candidates were women or people of color, regardless of the composition of the qualified applicant pool. They contend that between 2021 and 2025, this policy barred them from meaningful advancement opportunities, as candidates outside their demographic group were advanced into management despite weaker qualifications.

The lawsuit asserts that these practices violate Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, sex, or national origin, and cites the companies’ public diversity commitments as evidence that stated DEI benchmarks were effectively used as quotas.

LEGAL INTERPRETATION

The lawsuit against Danaher and Pall Corp. alleges that stated DEI benchmarks were applied as fixed quotas, creating adverse outcomes for employees outside the targeted demographic groups.

Under Title VII of the Civil Rights Act of 1964, employment decisions cannot be based on race, sex, religion, color, or national origin, except in very limited circumstances. Courts have permitted specific numerical requirements only as part of court-ordered remedies for proven discrimination, or in narrowly tailored voluntary affirmative action programs that meet strict legal criteria. Courts have also distinguished between flexible diversity goals or outreach efforts, which may be permissible, and rigid quotas that automatically exclude qualified candidates based on protected characteristics, which are generally prohibited.

This case will require the court to assess whether the companies’ practices, as alleged, fall within those prohibited quota frameworks under Title VII.

BRIDGE POV
The Danaher lawsuit reinforces a longstanding principle: company-imposed quotas have never been lawful under Title VII. While practices that expand access and ensure fairness remain permissible, identity-based mandates have always carried legal risk.

This case underscores the importance of ensuring inclusion strategies are designed and communicated in ways that emphasize fairness, process, and access rather than demographic requirements.

ACTIONABLE STRATEGIES

1. Shift From Identity-Exclusive to Access-Oriented Programs: Review hiring, promotion, mentorship, and sponsorship initiatives to ensure eligibility is open to all employees. Programs can still be designed to close opportunity gaps but must avoid restricting participation based on race, sex, or other protected categories.
    
2. Evaluate Policies and Communications Through a Title VII Lens: Audit public statements, internal documents, and manager guidance for language that could be construed as quota-like or exclusionary. Involve legal counsel to preserve privilege and strengthen defensibility.
    
3. Anchor Equity in Business and Talent Strategy: Frame inclusion initiatives around expanding opportunity, improving talent access, and driving innovation. Position equity not as demographic compliance but as a strategic imperative that supports competitiveness and growth.