diff --git a/.github/workflows/continuous.yml b/.github/workflows/continuous.yml
index 803f53cb9..cf57817ca 100644
--- a/.github/workflows/continuous.yml
+++ b/.github/workflows/continuous.yml
@@ -45,6 +45,8 @@ jobs:
         if: ${{ matrix.format }}
         run: ./gradlew verifyPython
       - name: Build with Gradle
+        env:
+          DJL_COMPILE_JAVA: "true"
         run: ./gradlew --refresh-dependencies build :jacoco:testCodeCoverageReport --stacktrace
       - name: Upload test results
         uses: actions/upload-artifact@v7
diff --git a/.github/workflows/optimization_integration.yml b/.github/workflows/optimization_integration.yml
index c21a659ad..8236bcf0d 100644
--- a/.github/workflows/optimization_integration.yml
+++ b/.github/workflows/optimization_integration.yml
@@ -175,7 +175,7 @@ jobs:
           IMAGE_REPO: ${{ inputs.image-repo }}
           CONTAINER: "lmi"
         run: |
-          SERVING_VERSION=${TEST_SERVING_VERSION:-"0.36.0"}
+          SERVING_VERSION=${TEST_SERVING_VERSION:-"0.38.0"}
           SERVING_VERSION=$(echo $SERVING_VERSION | xargs) # trim whitespace
 
           if [ -n "$OVERRIDE_TEST_CONTAINER" ]; then
diff --git a/gradle/libs.versions.toml b/gradle/libs.versions.toml
index 7c354e8b4..8b92e1f37 100644
--- a/gradle/libs.versions.toml
+++ b/gradle/libs.versions.toml
@@ -2,8 +2,8 @@
 format.version = "1.1"
 
 [versions]
-djl = "0.36.0"
-serving = "0.36.0"
+djl = "0.38.0"
+serving = "0.38.0"
 onnxruntime = "1.20.0"
 commonsCli = "1.9.0"
 commonsCodec = "1.18.0"
diff --git a/serving/src/test/java/ai/djl/serving/WorkflowTest.java b/serving/src/test/java/ai/djl/serving/WorkflowTest.java
index 5d070a4f4..1410ad75e 100644
--- a/serving/src/test/java/ai/djl/serving/WorkflowTest.java
+++ b/serving/src/test/java/ai/djl/serving/WorkflowTest.java
@@ -24,6 +24,7 @@
 
 import org.apache.commons.cli.CommandLine;
 import org.testng.Assert;
+import org.testng.SkipException;
 import org.testng.annotations.BeforeSuite;
 import org.testng.annotations.Test;
 
@@ -70,6 +71,15 @@ public void testCriteria() throws IOException, BadWorkflowException {
 
     @Test
     public void testFunctions() throws IOException, BadWorkflowException {
+        // functions.json declares a custom WorkflowFunction that ships as a bundled .java source
+        // under workflows/libs/classes, so this test needs DJL to compile it at load time. That
+        // is opt-in as of DJL 0.37.0, so skip unless the opt-in is set.
+        boolean envOptIn = Boolean.parseBoolean(Utils.getenv("DJL_COMPILE_JAVA", "false"));
+        boolean propOptIn =
+                Boolean.parseBoolean(System.getProperty("ai.djl.compile_java", "false"));
+        if (!envOptIn && !propOptIn) {
+            throw new SkipException("Java compilation is disabled");
+        }
         Path workflowFile = Paths.get("src/test/resources/workflows/functions.json");
         runWorkflow(workflowFile, zeroInput);
     }