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Job seekers say AI tools violate credit reporting laws

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Two women seek to represent a nationwide class of

applicants

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One-third of Eightfold customers are Fortune 500 companies

(Adds Eightfold comment in paragraphs 7-8)

By Jody Godoy

Jan 21 (Reuters) - Eightfold AI, a venture

capital-backed artificial intelligence hiring platform used by

Microsoft ( MSFT ), PayPal ( PYPL ) and many other Fortune 500

companies, is being sued in California for allegedly compiling

reports used to screen job ‌applicants without their knowledge.

The lawsuit filed on Tuesday is the first in the U.S. to

accuse an AI hiring company of violating the Fair Credit

Reporting ​Act, according to the law firms that filed the case,

and shows how consumer advocates are seeking to apply ‍existing

law to AI systems capable of drawing inferences about

individuals based on vast ⁠amounts of data.

Santa Clara, California-based ⁠Eightfold provides tools that

promise to speed up the hiring process by assessing job

applicants and predicting whether they would be a good fit for ‌a

job using massive amounts of data from online resumes and ​job

listings.

But candidates who apply for jobs at companies that use

those tools are not given notice and a chance to dispute errors,

job applicants Erin Kistler and Sruti Bhaumik allege in ⁠their

proposed class action.

Because of that, they claim Eightfold violated ‍the FCRA ​and

a California law that gives consumers the right to view and

challenge credit reports used in lending and hiring.

"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," they said in the lawsuit.

Eightfold spokesperson Kurt Foeller said the platform

operates on data shared by candidates or provided by 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," Foeller

said.

Eightfold is backed by venture capital firms including

SoftBank Vision Fund and General ​Catalyst.

Kistler and ‍Bhaumik sued in California state court on behalf

of all U.S. job seekers who applied for jobs and were evaluated

using the company's tools. Labor law firm Outten & Golden and

nonprofit advocacy group Towards ​Justice represent the proposed

class.

Eightfold creates talent profiles of job seekers that

include personality descriptions such as "team player" and

"introvert," rank their "quality of education," and predict

their future titles and companies, according to the lawsuit.

Kistler applied to roles at several companies that use

Eightfold, including PayPal ( PYPL ), and Bhaumik applied to companies

including Microsoft ( MSFT ), according to the complaint. Both hold

science or tech degrees and have more than 10 years of

experience. Neither was hired, and both believe that Eightfold's

tools played a role.

Microsoft ( MSFT ) and PayPal ( PYPL ) are not defendants in the ​lawsuit. A

Microsoft ( MSFT ) spokesperson declined to comment. A spokesperson for

PayPal ( PYPL ) did not immediately reply to a request for comment.

One-third of Eightfold customers are Fortune 500 companies,

including Salesforce ( CRM ) and Bayer, according to

the company's website. The New York State Department of Labor

and Colorado Department of Labor and ‍Employment also offer

Eightfold-powered platforms for job seekers.