Job hunting today is highly frustrating for millions of Americans who lack the chance to even get past the first hurdle of an artificial intelligence that reviews their application before any human ever gets to see them. Now, a revolutionary case raises the question of whether these AI gatekeepers should have to unseal their methods behind rejecting applicants.
This case involves Eightfold AI, a Silicon Valley-based business that created an enormous database of profiles of workers around the globe totaling more than one billion workers. When people apply to other companies through Eightfold’s platform to find other job opportunities, it provides them with a score of one to five based on their skill set and the needs of that company.
The unhappy candidates, whose number didn’t make the cut, are often clueless as to where they went wrong or which data was against them.
This is a problem that Erin Kistler is very familiar with. She is a computer science graduate, but like thousands, she has been painstakingly tracking her thousands of job applications over the last year. What is shocking is that only a paltry 0.3 percent have led to follow-up conversations.
Several of those applications went through Eightfold’s system, and she never received any feedback about her scores.
“I think I deserve to know what’s being collected about me and shared with employers,” Kistler said. “And they’re not giving me any feedback, so I can’t address the issues.”
The Landmark Class Action Against AI Gatekeepers
This lawsuit is an innovative approach in the use of the law, as the plaintiffs claim the AI filtering tools need to be subjected to the same level of disclosure as credit reporting agencies.
The Fair Credit Reporting Act, which Congress made into law in 1970, forces credit agencies to disclose the information they have collected on a person and offer the person an opportunity to dispute the information they believe is erroneous. The law actually applies not only to credit but to the “gathering of information on persons. used for employment purposes.”
David Seligman, whose nonprofit law firm, Towards Justice, is working to advance the case, agrees that this protection should be granted to A.I.-powered hiring tools as well.
There “is no A.I. exemption to our laws.” “Far too often, the business model of these companies is to roll out these new technologies, to wrap them in fancy new language, and ultimately to just violate peoples’ rights.”
The lawsuit filed in Contra Costa County Superior Court in California seeks to certify a class action and represents one of the first efforts to use consumer protection laws against algorithm-based recruitment systems. The plaintiffs are asking Eightfold to comply with various disclosure obligations and are seeking unspecified financial damages.
This is only the first in a long line of legal challenges to AI hiring technology, according to legal scholars. David Walton, an attorney in Philadelphia who specializes in advising companies about AI, admitted that companies are currently in uncharted legal territory.
When Artificial Intelligence Hiring Crosses the Line from Efficiency to Bias
While the company could say that they are merely providing an assessment that rates applicants as a recruiter would, the mechanisms by which they are doing that are questionable.
“These tools are designed to be biased. I mean, they’re designed to find a certain type of person,” Walton explained. “So they are designed to be biased, but they’re not designed to improperly be biased. And that’s a very fine line.”
There have been other lawsuits on the discrimination front against AI hiring tools. A high-profile 2023 case against Workday, another major hiring screening tool maker, accuses the company’s technology of illegally discriminating against older workers, the disabled, and Blacks.
Federal Judge Rita Lin found the evidence compelling enough to continue the case, as one individual was given an automated “reject message” at 1:50 a.m., less than an hour from when he initially applied, which “plausibly supports an inference of discrimination based on criteria unrelated to qualifications.”
The regulatory landscape has shifted dramatically under different administrations. In 2024, the Consumer Financial Protection Bureau issued guidance that was unequivocal.
The hiring dossiers and scores were covered under the Fair Credit Reporting Act. Once President Trump took office, acting director Russell Vought rescinded that guidance as part of his broader effort to dismantle the agency.
Jenny Yang, a former chair of the Equal Employment Opportunity Commission, now representing plaintiffs, said regulators began studying algorithmic hiring more than a decade ago. “We realized they were fundamentally changing how people were hired. People were getting rejected in the middle of the night and nobody knew why,” she said.
While corporate litigation typically drags on for years, the case is emblematic of emerging concerns about transparency and equity in cases where AI controls who receives job opportunities and who does not.
