AI-powered hiring platform Eightfold AI faces lawsuit over hiring data used to rate candidates

A group of job applicants filed a lawsuit against AI-powered hiring platform Eightfold AI this month, arguing that certain AI-powered résumé screening capabilities and the candidate scoring tools violate consumer protections afforded to job applicants by federal and state laws.

The suit alleges that Eightfold’s AI résumé screening and candidate scoring tools “collect sensitive and often inaccurate information about unsuspecting job applicants and to score them from 0 to 5 for potential employers based on their supposed ‘likelihood of success’ on the job,” similar to the personal and financial files developed and used by credit reporting agencies to score consumers’ creditworthiness and thus should be governed by the Fair Credit Reporting Act and, at least in California where the lawsuit was filed, the California Investigative Consumer Reporting Agencies Act.

“I’ve applied to hundreds of jobs, but it feels like an unseen force is stopping me from being fairly considered,” Erin Kistler, one of the two named plaintiffs in the class action, said in a statement after the suit was filed. “I know I’m not alone in feeling this way.”

The Fair Credit Reporting Act hasn’t been used this way before, according to reporting from the New York Times, but it defines what purposes credit reporting agencies can develop their reports, requires them to disclose information in credit reports used to score to consumers, and requires companies to allow consumers to dispute inaccuracies.

The Fair Credit Reporting Act “includes a broad definition of consumer reports” to mean any that are “used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for” access to credit, insurance, or for “employment purposes,” according to attorneys in the filing, citing the law. The California Investigative Consumer Reporting Agencies Act provides similar protections in the Golden State, according to the suit.

“Eightfold’s technology lurks in the background of job applications for thousands of applicants who may not even know Eightfold exists, let alone that Eightfold is collecting personal data, such as social media profiles, location data, internet and device activity, cookies and other tracking, to create a profile about the candidate’s behavior, attitudes, intelligence, aptitudes and other characteristics that applicants never included in their job application,” the lawsuit alleges. “These job applicants have no meaningful opportunity to review or dispute Eightfold’s AI-generated report before it informs a decision about one of the most important aspects of their lives—whether or not they get a job.”

The case could have implications for Eightfold AI clients and other employers that deploy AI-screening tools in the recruiting and hiring process.

If the courts agree with the plaintiffs “legal theory,” it could impact Eightfold and similar vendors that deploy AI technology in the hiring process, potentially requiring them to disclose which data is being collected and used to evaluate candidates and to allow applicants to dispute errors.

The suit alleges that there is no AI-exemption from these protections, “which have for decades been an essential tool in protecting job applicants from abuses by third parties,” likening the AI tools to background check companies that are governed by the measure.

“This characterization about our products is factually incorrect,” Kurt Foeller, an Eightfold spokesman told HR Brew via email when asked for comment. “Eightfold offers technology that enterprises use to manage their talent processes and engage with candidates. Eightfold does not ‘lurk’ or scrape personal web history, social media or the like to build ‘secret dossiers.’ Eightfold’s platform operates on data submitted by candidates to our customers or provided by our customers.”

The platform collects “information such as skills, experience and education that applicants choose to submit to our customers and data authorized by our customers under contract,” according to Eightfold, adding that candidates have the ability to view and correct errors.

The Eightfold AI lawsuit follows an earlier class action case brought against the major HCM platform Workday over alleged algorithmic bias in its hiring software. At issue in that case, Mobley v. Workday, is whether or not Workday’s AI-powered hiring system disparately impacts applicants based on age. That suit alleges Workday’s AI-powered hiring tools discriminate against people over the age of 40. A federal judge this summer granted the class conditional certification to proceed and allow additional members of the class to opt-in.

The lawsuits are some of the earliest and hotly watched legal challenges to the growing and already widespread use of AI technology to supplement, or even replace, human decision-making in hiring.