For the past four years, Erin Kistler has applied to thousands of jobs at companies like PayPal, Microsoft, and Netflix, only to have her résumé vanish without a trace. As a product manager with nearly 20 years of experience, Kistler believes she was qualified for every position, yet she never got a single interview.
Now, Kistler is suing Eightfold AI, a Silicon Valley company that makes hiring software used by hundreds of employers, including the ones she applied to. The lawsuit, filed in January in a California court, is one of the first to argue that automated screening acts like an undisclosed consumer report or applicant profile. It ranks job seekers on their chances of success without giving them the chance to see or challenge the results, according to Kistler’s legal team.
This case is part of a wave of new legal disputes over how companies use AI in employment decisions. Workers are also suing Meta over an internal AI system they say targeted them for layoffs because they took parental or medical leave. Another recent lawsuit claims IBM used AI tools that discriminated against older workers.
More and more US companies are turning to AI to make workplace decisions faster and more efficiently, often presenting it as a way to be objective. But experts who study this kind of software say it can also introduce or worsen bias that might follow candidates from one company to another. Lawmakers are starting to pay attention. The outcomes of these legal battles could shape future hiring practices, how transparent they are, and how much power candidates have in the process.
“There’s actually no law requiring a notice or disclosure of the use of these AI hiring systems,” said Ifeoma Ajunwa, a professor at Emory University School of Law and founding director of the AI and Future of Work program. “So companies are not necessarily telling workers when they’re being evaluated with AI.”
AI use in hiring is growing. Last year, 90% of employers used some form of automation in their hiring process, according to a report from the World Economic Forum. These tools range from simple filtering—like removing candidates who don’t have a four-year degree or another requirement—to using AI to assess a job applicant’s skills or even conduct the initial phone interview.
In Eightfold’s case, the company describes itself as “the world’s largest, self-refreshing source of talent data.” It constantly updates an internal database with information from the résumés, LinkedIn profiles, and social media accounts of over a billion workers who have applied for jobs through its platform. Using this data, it applies AI to score applicants on a scale of 0 to 5, predicting how well they would perform in a given job. That score can then prioritize some candidates over others for interviews.
“A large part of the problem is that job applicants don’t know … what the reports say,” said Rachel Dempsey, an attorney representing Kistler.
Dempsey argues that job seekers deserve the same transparency into the hiring process that Americans already get with their credit reports. With that information, they could dispute mistakes or work on improving factors that affect their candidacy. But without any insight, it’s impossible to know if these algorithms discriminate against candidates in clear ways, Dempsey said.
“The concept of a black box is very scary,” she says.
In a statement to the Guardian, Eightfold AI denied the allegations. “We believe the claims asserted are without merit and intend to defend ourselves vigorously,” a spokesperson wrote in an email.
In response to the lawsuit against IBM, the company denied using AI to automatically screen out candidates and said in a statement that it “does not condone or tolerate discrimination of any kind.” Meta did not respond to a request for comment on its lawsuit.
The fear of algorithmic blacklisting
Though employment software providers claim to free up hiring managers to spend more time with qualifiedWhile AI has the potential to remove human biases from hiring, experts disagree. They argue that AI can actually make biases worse, such as favoring certain demographic groups.
“As we’ve done more research on AI hiring systems, we’ve found that they tend to replicate many of the same biases that human managers have,” said Ajunwa.
Nearly all AI systems are trained to identify patterns, which can reinforce stereotypes or long-standing biases. For example, Amazon once used an AI tool that ranked women’s résumés lower because the company’s top performers were men. Amazon stopped using it after discovering the problem. In other cases, AI hiring systems can create their own biases. In her book The Quantified Worker, Ajunwa found that AI gave poor scores to job applicants with southern accents because it struggled to understand them during voice interviews.
Human hiring managers can also be unfair—like choosing a candidate who was in the same fraternity—but “the scale of bias is even stronger with AI,” said Xuechunzi Bai, an assistant professor at the University of Chicago who has studied hiring bias.
Bai co-authored a recent study where AI models were asked to make hiring decisions about fictional applicants from made-up demographic groups called Tufa, Aima, Reku, and Weki. After several rounds of decisions, the AI models made assumptions about candidates that had nothing to do with their qualifications, effectively stereotyping them. If one Tufa was a good doctor, then Tufa candidates were more likely to be chosen as doctors, while Weki candidates were more likely to be hired as janitors.
The study found more bias in AI than in human hiring decisions that Bai examined last year. It also found that newer, more advanced models produced hiring decisions with even more bias.
“We were quite shocked to see this result,” Bai said. AI models are very good at solving problems with a single correct answer, like math or coding. “But they’re getting worse at exploring other options,” Bai said. “In hiring, exploration is very important, but these models aren’t trained to do it.”
The impact of AI bias on an applicant can go beyond just one job opening. If a worker is rejected by a person, they can try again at another company with a different hiring manager. But if a worker is rejected by an algorithmic system used across many companies, the system “remembers the decision that was already made and repeats it for efficiency,” said Ajunwa. “In reality, you’ve been algorithmically blackballed.”
Because many companies use hiring software built on the same foundational AI models, there’s a concern that a negative flag could make it much harder for a candidate to get any job at all, said Katie Creel, co-author of a recent study on the risks of “algorithmic monoculture” in hiring systems. “People will be shut out of jobs more than they would have been otherwise,” she said.
Eightfold AI did not comment on the matter.
Can AI be used responsibly in hiring?
While AI tools can save time or help test candidates’ skills, hiring managers shouldn’t let AI make decisions, said Iman Abuzeid, CEO of Incredible Health, an AI hiring platform used by over 1,500 healthcare employers. Incredible Health offers an AI agent to conduct phone interviews, but the AI doesn’t automatically reject, score, rank, or decide who moves forward, according to Abuzeid.
“It’s about gathering information from candidates so a human is better equipped to make the decision,” Abuzeid said.
Abuzeid also noted that about 10% of Incredible Health’s AI interviews are audited for bias by a human, a process that’s becoming a legal requirement in more cities and states.
In New York City, a law that took effect in 2023 requires employers using automated systems in hiring to conduct annual bias audits and notify candidates in advance about the technology’s use. However, the law only applies to software that “substantially” assists or replaces human decision-making.essentially assists in or replaces decision-making, creating a loophole for cases where humans are involved in the process. Recent laws in Illinois and Colorado also prohibit employers from using AI tools that lead to unlawful discrimination.
More and more, city and state regulations are aiming to make it a basic requirement to notify job applicants when AI is being used. But ideally, candidates should have insight into what their algorithmic profiles say about them, according to Jenny Yang, a partner at Outten & Golden, the law firm representing the plaintiffs in the lawsuit against Eightfold AI.
“This initial transparency helps better identify where problems might exist,” Yang said, referring to notifications that AI was used. “There’s growing concern among workers that they might be denied opportunities for reasons no one understands.”
Frequently Asked Questions
Here is a list of FAQs addressing the intersection of AI job displacement and the legal challenges facing automated hiring tools
General Questions The Big Picture
1 Will AI actually take my job
Answer Its unlikely to eliminate most jobs entirely but it will definitely change them AI is great at automating repetitive tasks Instead of replacing you entirely it will likely take over those specific tasks allowing you to focus on work that requires human judgment creativity and emotional intelligence Think of it as a tool not a replacement
2 Are the lawsuits about AI hiring tools actually about job loss
Answer No The lawsuits are about fairness They claim that AI software used to screen resumes and interview candidates is biased against people of color women and older workers The lawsuits argue that these tools are black boxes that make decisions even the employers dont fully understand which violates civil rights laws
3 What does lack of transparency mean in an AI hiring context
Answer It means that when an AI rejects a candidate neither the applicant nor the employer can clearly explain why The AI uses complex algorithms with thousands of data points If the software gives a low score no one can point to a specific reason like you lacked 5 years of experience This makes it nearly impossible to prove discrimination or fix a bad hiring process
BeginnerLevel Questions
4 How are companies using AI to hire right now
Answer In a few ways 1 Resume screening software scans your resume for keywords and ranks it against others 2 Chatbots they ask you preliminary questions 3 Video interviews AI analyzes your facial expressions tone of voice and word choice to score your cultural fit or enthusiasm
5 If I get rejected by a robot is that illegal
Answer Not automatically Its illegal if the AI is discriminating against you based on protected characteristics like race gender age or disability If you are simply not qualified for the job thats legal The lawsuits claim that the AI is unfairly penalizing people based on these protected traits which is where the legal trouble begins
