Workers’ rights advocates at Outten & Golden LLP and Towards Justice have filed a first-in-the-nation class action lawsuit against Eightfold AI Inc., a global artificial intelligence company whose platform allegedly generates secretive, AI‑driven “consumer reports” on job applicants—often without their knowledge, consent, or any opportunity to correct errors—before the reports are used to screen them for jobs.
According to the complaint, Eightfold’s technology quietly operates behind the scenes of online job applications at some of the nation’s largest employers, including Microsoft, Morgan Stanley, Starbucks, BNY, PayPal, Chevron, and Bayer. While applicants submit resumes and wait for a response, Eightfold allegedly scrapes vast amounts of personal data—much of it inaccurate, incomplete, or drawn from unknown third-party sources—and funnels it through a proprietary large language model to score and rank candidates based on their supposed “likelihood of success” in the role.
The lawsuit describes how, just like employment background checks, these AI-generated evaluations function as “consumer reports under the federal Fair Credit Reporting Act (FCRA) and California law. Yet the complaint alleges that Eightfold provides none of the basic legal protections that have governed such reports for decades: no disclosure that a report exists, no access to the report itself, no opportunity to dispute errors, and no safeguards before the information is used to make life-altering employment decisions. The lawsuit explains that Eightfold’s use of AI technology does not place it above these laws, and that there is no “AI exemption” from longstanding worker and consumer protections.
The proposed class action was filed by two women with STEM backgrounds who believe Eightfold’s AI tools hurt their careers by unfairly screening them out for positions for which they were qualified at major companies like Microsoft and Paypal.
“I’ve applied to hundreds of jobs, but it feels like an unseen force is stopping me from being fairly considered,” said Erin Kistler, one of the named plaintiffs. “It’s disheartening, and I know I’m not alone in feeling this way.”
If successful, the case could reshape the AI‑driven hiring landscape by requiring greater transparency, accuracy, and accountability for the millions of workers evaluated by these systems every year.
“Just because this company is using some fancy-sounding AI technology and is backed by venture capital doesn’t put it above the law. This isn’t the wild west,” said David Seligman, Executive Director of Towards Justice. “AI systems like Eightfold’s are making life-altering decisions about who gets a job, who gets housing, who gets healthcare, and we’ve got a choice to make: are we going to let them and their investors pull the wool over our eyes and hijack our marketplace? Or are we going to make sure they follow the laws on the books and provide the most basic things, like fairness, transparency, and accuracy? That’s what this case is about.”
As more companies implement AI‑driven processes at scale, and as mass layoffs push more Americans into the job market, the need to bring AI-based hiring tools into compliance with existing employment and consumer‑protection laws is urgent.
“Qualified workers across the country are being denied job opportunities based on automated assessments they have never seen and cannot challenge,” said Jenny R. Yang, Partner at Outten & Golden LLP and former Chair of the U.S. Equal Employment Opportunity Commission. “These are the very real harms Congress sought to prevent when it enacted the FCRA. As hiring tools evolve, AI companies like Eightfold must comply with these common-sense legal safeguards meant to protect everyday Americans.”
The lawsuit marks a critical new front in the fight to protect workers from the widespread abuses of AI across the labor market. It is the first case brought by Towards Justice’s AI in the Workplace Accountability Project. The workers in this proposed class action are represented by Christopher M. McNerney, Jenny R. Yang, and Allison Aaronson of Outten & Golden LLP; and Rachel W. Dempsey, David Seligman, and Seth Frotman of Towards Justice.
The complaint can be viewed here.
