A proposed class action claims Eightfold AI unlawfully generated hiring scores using third-party data without complying with federal and California consumer reporting laws.

Two job applicants filed a class action lawsuit against Eightfold AI in California state court, alleging the company’s AI-driven hiring platform violates longstanding consumer protection laws by collecting and using personal data to evaluate candidates without required disclosures or safeguards.

The complaint, filed in the Superior Court of California, Contra Costa County, alleges that Eightfold operates as a consumer reporting agency and produces “consumer reports” used by employers to make hiring decisions, triggering obligations under the Fair Credit Reporting Act (FCRA) and California’s Investigative Consumer Reporting Agencies Act (ICRAA).

The plaintiffs claim that Eightfold collects information about job applicants from many sources beyond their resumes, including public profiles (like LinkedIn), location data, online activity, and other third-party databases. The system then assigns each applicant a “match score” on a scale of 0 to 5, intended to predict their likelihood of success in the role. Employers use these scores to rank candidates, often focusing only on those with the highest scores and filtering out lower-scoring applicants before a human reviews their applications.

According to the complaint, employers used these reports to filter candidates, often before any human review.

The lawsuit alleges that Eightfold failed to meet specific FCRA and ICRAA requirements, including:

• Providing a clear, standalone notice that a report about the applicant will be created and used by the employer to make hiring decisions
• Obtaining applicant authorization before collecting and using data
• Allowing applicants to access, review, and dispute the information found in these reports
• Ensuring employers certify compliance with disclosure and adverse action requirements

The complaint states that applicants were not informed about the use of external data sources, were not given access to their reports, and were not provided an opportunity to correct inaccuracies before employment decisions were made.

The plaintiffs further allege that Eightfold’s system generated assumptions about the candidates’ characteristics, such as behavior, aptitude, and personality.

The case also cites 2024 guidance from the Consumer Financial Protection Bureau stating that algorithmic hiring scores based on third-party data can qualify as consumer reports under the FCRA when used for employment decisions.

The case has just been filed. The plaintiffs are asking the court to allow it to move forward as a class action lawsuit covering job applicants across the U.S. and California who were evaluated using Eightfold’s tools. Claims include violations of the FCRA, ICRAA, and California’s Unfair Competition Law.