Layoffs and AI hiring tools are driving class action risk, corporate counsel say - HR Executive

A survey of corporate counsel, published by HR Executive with all the gravitas of a company newsletter, has revealed that 47% of them think layoffs are the most likely cause of a class action lawsuit in 2026. That's almost half of the people paid to foresee disaster, calmly flagging that your restructuring plan is a legal IED wrapped in a severance agreement. And they're not wrong—they've seen the WARN act violations, the age discrimination claims, the disparate impact lawsuits simmering underneath. It's almost as if mass firings tend to upset people and their lawyers, who are also professionals.

But there's more: AI hiring tools are also driving legal risk, with state-level exposure growing like a particularly aggressive mould. So companies are double-fisting it: they're laying off workers while simultaneously using unvalidated algorithms to hire a few more, algorithms that are almost certainly breaking Illinois' biometric privacy law or New York City's AI hiring audit law. The result is a perfect storm of litigation: disgruntled ex-employees on one side, rejected candidates with a discrimination claim on the other, and corporate counsel somewhere in the middle, billing for every deposition and loving every minute of it.

And the kicker? Either way, the class action boom is coming. With state-level AI laws proliferating faster than a GPT-4 hallucination, every RIF and every automated resume screening is a potential lead plaintiff's dream. Maybe we can train an AI to predict the settlement amount—after all, that's where the real efficiency lies. Efficiency and billable hours: the only metrics that matter.