As artificial intelligence (AI) becomes more deeply integrated in hiring, a new lawsuit is putting the spotlight on how these systems assess job seekers, and whether they are playing by long-standing employment laws.
Eightfold AI, a California-based hiring platform used by major companies such as Microsoft and PayPal, has been sued for allegedly helping employers evaluate job applicants without their knowledge.
TL;DR
- Eightfold AI is being sued in California for allegedly violating the Fair Credit Reporting Act (FCRA).
- The company is accused of compiling detailed profiles of job seekers without proper notice or a dispute process.
- The case may set a precedent for AI accountability in U.S. hiring practices.
The case, filed in California state court, claims the company violated the Fair Credit Reporting Act (FCRA) by compiling and sharing applicant assessments without giving candidates proper notice or a chance to dispute potential errors.
According to the lawsuit, Eightfold creates detailed talent profiles of job seekers using large volumes of data from resumes and job listings. These profiles reportedly include personality traits like “team player” or “introvert,” rankings of education quality, and predictions about future job titles and employers. The plaintiffs argue that such reports were used to screen candidates secretly, influencing hiring decisions behind the scenes.
The case was brought by job applicants Erin Kistler and Sruti Bhaumik, who applied for roles at companies including PayPal and Microsoft that use Eightfold’s tools. Both have over a decade of experience and hold science or tech degrees, but were not hired. They believe Eightfold’s assessments played a role in their rejection. Neither Microsoft nor PayPal is named as a defendant.
“There is no AI-exemption to these laws, which have for decades 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,” the applicants mentioned.
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Eightfold has pushed back against the claims. Spokesperson Kurt Foeller said the platform relies on data shared directly by candidates or provided by its customers. “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,” he said.
Legal experts say the lawsuit could become a landmark case, as it is believed to be the first in the U.S. to directly accuse an AI hiring company of violating the FCRA. With one-third of Eightfold’s customers being Fortune 500 companies and even state labor departments using its tools, the outcome could have wide-reaching implications for AI-driven recruitment.
