Employees and applicants continue to challenge the use of AI in employment. Last week we discussed bias and discrimination resulting from AI screening in the hiring process. This week we are looking at another AI application for screening candidates in which a company used AI to collect personal data to rank job candidates for employers, and whether such rankings are subject to requirements and protections of the federal Fair Credit Reporting Act (FCRA).

In Kistler v. Eightfold AI Inc., filed in California, plaintiffs Erin Kistler and Sruti Bhaumik (Plaintiffs) filed a class action alleging defendant, Eightfold AI Inc. (Defendant) AI applications used to create job candidate profiles violated the FCRA.

Defendant’s software collects personal data on job applicants from multiple third party publicly available sources, including “social media profiles, location data, internet and device activity, cookies and other tracking” which is fed into a proprietary AI model to create candidate profiles. Defendant uses the profile data to predict “candidate’s behavior, attitudes, intelligence, aptitudes and other characteristics that applicants never included in their job application” and provide a ranking of the candidate’s suitability for the position to potential employers. Plaintiffs allege Defendant, in collecting and evaluating the data functioned as a consumer reporting agency and created consumer reports which were provided to employers without Plaintiffs’ knowledge or written permission.

Under the FCRA a consumer report is defined as any written, oral, or other information which weighs on a consumer’s “… character, general reputation, personal characteristics or mode of living, used or expected to be used…” for employment purposes, including evaluation of employment eligibility. (15 U.S.C. § 1681a; 15 U.S.C. § 1681a(h)) When using such information, the employer must inform the consumer (applicant or employee) the information in the report may be used for purposes of an employment decision and the applicant or employee must provide written permission for the employer to do so. (15 U.S.C. § 1681d)

According to Plaintiffs, the evaluation and scoring of the data is tantamount to a consumer report as it is making “subjective assessments and inferences” about the candidate’s qualities. In doing so, Plaintiffs allege, in part, Defendant is “gathering, assembling, and evaluating information about job applicants through opaque machine learning processes and closely guarded algorithms” to produce candidate profiles that applicants cannot meaningfully review or dispute. This case is still in the initial stages of litigation so it remains to be seen how the issues raised will be resolved.

While the outcome is unknown, this is another example of how use of AI generated information can pose compliance and liability issues for employers in unexpected ways. Given the evolving nature of the law around use of AI, employers must understand how vendors are collecting data and generating AI-based evaluations to ensure the use of the data on which the AI relies is compliant with other applicable laws intended to protect applicants and employees. If you or your organization need assistance evaluating legal compliance associated with use of AI generated hiring tools, contact Wiley Reber Law for legal advice that works.