Eightfold AI, an AI recruitment platform based in the US and used by companies such as Microsoft and PayPal, as well as various Fortune 500 firms, is being sued in California for reportedly compiling applicant screening reports without their consent.
The lawsuit, filed on January 20, marks the first case in the US to accuse an AI recruitment firm of breaching the Fair Credit Reporting Act, according to the legal firms that initiated the suit. It also highlights how consumer advocates are seeking to enforce existing laws on AI systems that can infer information about individuals through extensive data analysis.
“In order to protect against the harms of such reports, the FCRA requires consumer reporting agencies like Eightfold to make certain disclosures, obtain certain certifications, and ensure that consumers (here, job applicants) have a mechanism to review and correct reports that are provided to prospective employers for purposes of determining eligibility for employment,” the suit said.
The startup offers tools to speed up hiring by assessing job applicants and predicting their fit for positions using data from online resumes and job listings.
“There is no AI-exemption to these laws, which, for decades, have been an essential tool in protecting job applicants from abuses by third parties, like background check companies, that profit by collecting information about and evaluating job applicants,” they said in the lawsuit.
However, individuals seeking employment at firms that use these technologies are not informed or given an opportunity to contest inaccuracies, as alleged by Erin Kistler and Sruti Bhaumik in their proposed class-action lawsuit.
As a result, they assert that Eightfold breached the FCRA and a California statute that grants consumers the right to access and dispute credit reports utilised in hiring and lending.
According to Eightfold representative Kurt Foeller, the platform operates on data provided by candidates or clients, as reported by Reuters.
“We do not scrape social media and the like. We are deeply committed to responsible AI, transparency, and compliance with applicable data protection and employment laws,” Foeller said.
According to the lawsuit, Eightfold generates consumer reports for potential employers using its Evaluation Tools. They evaluate job candidates not just as individuals by claiming to pinpoint their likely skills, experiences, and traits, but also in relation to each other, ranking applicants on a scale from 0 to 5 based on the findings, conclusions, and assumptions derived from Eightfold’s proprietary AI regarding their “likelihood of success.”
Eightfold creates talent profiles of job seekers that include personality descriptions such as ‘team player’ and ‘introvert’, ranks their ‘quality of education’, and predicts their future titles and companies, according to the lawsuit.
“Employers use these reports to sift through applications, typically only reviewing highly ranked candidates. Lower-ranked candidates are often discarded before a human being ever looks at their application,” the lawsuit said.
Kistler and Bhaumik filed a lawsuit in California state court on behalf of all job applicants in the US who were assessed using the company’s tools. The proposed class is represented by the labour law firm Outten & Golden and the nonprofit advocacy organisation Towards Justice.
Kistler sought positions at various companies that use Eightfold, including PayPal, while Bhaumik pursued opportunities at firms like Microsoft, as stated in the complaint. Both individuals have degrees in science or technology and over a decade of experience. They were not selected for employment, and each believes that Eightfold’s tools contributed to this outcome.
Microsoft and PayPal are not named as defendants in the lawsuit.
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