Groundbreaking Lawsuit Tests Whether AI Hiring Tools Trigger FCRA Compliance
A company selling artificial intelligence (AI)-powered applicant assessment tools has been hit with a lawsuit that may be the first of its kind to claim that such tools violate the federal Fair Credit Reporting Act (FCRA) and its California equivalent, the Investigative Consumer Reporting Agencies Act (ICRAA). This case could be the tip of the iceberg for lawsuits based on AI-powered tools that employers are increasingly using to make hiring and other employment decisions. Quick Hits A proposed class action alleges that a widely-used AI-powered tool violates the federal FCRA and California’s ICRAA by compiling sensitive, individualized personal information on job applicants without their consent. The complaint contends that by evaluating applicants based on extensive data sources—such as LinkedIn profiles, publications, and job application history—the tool generates consumer reports subject to the disclosure, authorization, notification, and certification requirements of both stat...