A class action complaint filed in California state court, USA, demanding jury trial has named the artificial intelligence recruiting startup, Eightfold AI Inc, as the defendant. The company in question was co-founded by Indian-origin industry leaders Ashutosh Garg and Varun Kacholia and is used by the likes of Microsoft, PayPal and many other Fortune 500 companies.
Even high-profile entities like the US Department of Defence and the State of New York trust the Eightfold AI.
Historic US lawsuit accusing AI company of FCRA violations
Plaintiffs Erin Kistler and Sruti Bhaumik, who are job seekers in the US, raised the case, alleging violations of the Fair Credit Reporting Act (FCRA) on behalf of themselves and others similarly affected. And so, the lawsuit filed on Tuesday, January 20 (US time), is the first in the US to accuse an AI hiring company of violating the FCRA, as per the law firms that filed the case. Consequently, the plaintiffs have accused the AI hiring of compiling reports used to screen job applicants unbeknownst to them.
According to the official Federal Trade Commission website, the Fair Credit Reporting Act (Title VI of the Consumer Credit Protection Act) “protects information collected by consumer reporting agencies such as credit bureaus, medical information companies and tenant screening services. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the Act.”
The official US government website further states that companies providing information to consumer reporting agencies must follow specific legal obligations. These include the duty to probe disputed information.
Allegations against Indian-origin founders’ AI startup
In its summary of claims, the lawsuit filed by Kistler and Bhaumik states, “Eightfold AI uses hidden AI technology to to collect sensitive and often inaccurate information
about unsuspecting job applicants and to score them from 0 to 5 for potential employers based on their supposed “likelihood of success” on the job.”
According to the suit, Eightfold’s technology lurks in the background of job applications for thousands of applicants who possibly don’t even know about the AI hiring platform’s existence.
And so, knowing that it is collecting personal data, including social media profiles, location data, internet and device activity, cookies and other tracking, to profile the candidate’s behaviour, attitudes, intelligence aptitudes and other characteristics that may have have otherwise never been included in the applicants’ job application is an even more far-fetched notion.
On top of that, the suit argues that the job applicants in the picture have no opportunity to review or dispute the AI hiring platform’s artificially generated report about them before sharing its calculated decisions about whether they get a job or not.
Taking an aim at Eightfold’s working process, the lawsuit notes that the class action arises from the AI firm’s “unlawful practice of gathering, assembling and evaluating information” related to job applicants by forming reports using AI-powered tools. By purportedly basing the same on factors like work history, projected future career trajectory, culture fit and other personal characteristics, the company sells the reports to employers, thereby influencing consequential employment decisions.
The plaintiffs, as established by the lawsuit, particularly take issue with how this process largely remains invisible to job applicants who simply submit their resume and job application to a prospective employer online and await a response.
Claiming that Eightfold violated the FCRA and a California law that entitles the consumer the right to view and question credit reports used in lending and hiring, the plaintiffs said in the lawsuit, “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 lawsuit further notes that Eightfold’s sense of profiling job seekers even revolved around describing them using terms like “team player” and “introvert,” and ranking their “quality of education.” Moreover, it goes on to score them from 0 to 5 based on their supposed “likelihood of success” on the job, and predict their future titles and companies.
Having applied for jobs, Kistler and Bhaumik sued the AI hiring company with labor law firm Outten & Golden and nonprofit advocacy group Towards Justice representing the proposed class. The complaint also highlights that Kistler applied to several companies that use Eightfold, including PayPay. Similarly, Bhaumik applied to companies like Microsoft.
Although both have science or tech degrees with more than 10 years of experience under their belts, neither was hired, for which they hold Eightfold’s AI-driven tools accountable.
More about Eightfold AI and its founders
The AI hiring company was founded in 2016, and is currently based in Santa Clara, California. As per its leadership profiles page, co-founders Ashutosh Garg and Varun Kacholia currently serve as the unicorn startup‘s CEO and CTO, respectively.
As per Reuters, Eightfold spokesperson Kurt Foeller said the platform’s operations are based 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,” the spokesperson said.
In a post shared on LinkedIn, Kacholia wrote a day ago, “There’s been a lot of discussion in the media lately around AI and hiring. It’s important to separate sensationalism from substance.”
Ashutosh Garg also posted on LinkedIn: “We started Eightfold AI 9 years ago with a clear mission: to enable the right career for everyone in the world. This mission has been the foundation of everything we do.”
Both Garg and Kacholia are also attached to another US-based startup Viven as the CEO and CTO, respectively. While Garg is an IIT Delhi and University of Illinois Urbana-Champaign alum, Kacholia pursued his higher education at IIT Bombay and University of California, Berkeley. The latter even worked at Google and Facebook in the past. Garg was also linked to Google at one point during his professional journey.