January 21 (Reuters) – Eightfold AI, an artificial intelligence hiring platform supported by venture capital and utilized by industry giants such as Microsoft and PayPal, faces a lawsuit in California. It is accused of assembling reports utilized to evaluate job applicants without their consent or awareness.
Filed on Tuesday, this litigation marks a significant milestone as it is the inaugural case in the United States where an AI hiring entity is charged with contravening the Fair Credit Reporting Act (FCRA).
Legal representatives of the plaintiffs claim this lawsuit epitomizes the efforts of consumer advocates to implement existing legislation to AI systems capable of extrapolating insights from extensive datasets.
Based in Santa Clara, California, Eightfold purports to expedite the recruitment process through tools designed to assess applicants and predict their suitability for roles by leveraging vast repositories of data from online resumes and job postings.
However, Erin Kistler and Sruti Bhaumik, the plaintiffs proposing a class action, assert that candidates applying for positions at organizations employing Eightfold’s systems are neither informed nor afforded the opportunity to contest inaccuracies.
The lawsuit contends that Eightfold breached the FCRA and a California statute that permits consumers to inspect and dispute credit reports utilized in employment and lending decisions.
“There is no exemption for AI within these laws, which have for decades played a pivotal role in shielding job applicants from the excesses of third-party entities—such as background check firms—that profit from the collection and evaluation of applicant data,” the plaintiffs stated in their filing.
Kurt Foeller, a spokesperson for Eightfold, asserted that the platform operates solely on data provided by candidates or clients.
“We do not extract information from social media or similar sources. We are steadfastly committed to ethical AI practices, transparency, and adherence to relevant data protection and employment regulations,” Foeller remarked.
Eightfold is financed by notable venture capital firms, including SoftBank Vision Fund and General Catalyst.
Kistler and Bhaumik initiated their lawsuit in a California state court on behalf of all U.S. job applicants assessed through Eightfold’s methodologies.
They are represented by the labor law firm Outten & Golden and the nonprofit advocacy organization Towards Justice.
Per the lawsuit, Eightfold constructs talent profiles for job seekers, detailing personality traits such as “team player” and “introvert,” evaluating the “quality of education,” and forecasting prospective job titles and employers.
Kistler applied for positions at multiple companies leveraging Eightfold’s services, including PayPal, while Bhaumik pursued roles at firms such as Microsoft. Both possess degrees in science or technology and over a decade of professional experience.
Neither was successful in securing positions, and they suspect Eightfold’s tools may have influenced these outcomes.
Notably, Microsoft and PayPal are not named as defendants in the action. A spokesperson for Microsoft declined to provide commentary, and a representative for PayPal did not immediately respond to inquiries.
Approximately one-third of Eightfold’s clientele comprises Fortune 500 corporations, including Salesforce and Bayer.
Additionally, the New York State Department of Labor and the Colorado Department of Labor and Employment utilize Eightfold-powered platforms for job seekers.
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