The EEOC Settles its First Discrimination Case Involving AI Hiring Software

Artificial Intelligence (AI) systems offer new opportunities for employers. For example, they make the hiring process easier. According to a 2022 Society for Human Resource Management (SHRM) survey, more than 75% of employers use AI and/or automation for recruitment and hiring. From the survey, the SHRM found that between 2023 and 2027, one in four organizations plan to start using or increase the use of automation or AI in recruitment and hiring. But while AI systems offer new opportunities for employers, these systems also have the potential to discriminate against job applicants. In fact, these systems do discriminate against job applicants. Just recently, the U.S. Equal Employment Opportunity Commission (EEOC), a commission that strives to protect employment rights, settled its first discrimination case involving AI hiring software.

About the Case

Last year, the EEOC filed a lawsuit against three integrated businesses that operate under the trade name “iTutorGroup” and offer English-language tutoring services to students in China. The EEOC filed the lawsuit after the parties were unable to reach a pre-litigation settlement through the commission’s conciliation process. According to the lawsuit, the defendants allegedly broke the law by programming an online recruitment software to reject applications from older applicants because of their age automatically. The EEOC claims that in 2020, the defendants programmed their tutor application software to automatically reject applications from females aged 55 or above and males aged 60 or above. Because of this programming, the defendants rejected over 200 job applicants in the U.S. because of their age. Such practice is prohibited under the Age Discrimination in Employment Act (ADEA).

The EEOC filed a lawsuit on behalf of an applicant who was above the age of 55 when she submitted her application. The Charging Party, who for purposes of this article we will call W.P., submitted her qualifications and date of birth as was required. Immediately, she was rejected. The EEOC claimed that in early 2020, the time when W.P. submitted her application, the defendants failed to hire W.P. and over 200 other qualified individuals aged 55 and older from the U.S. because of age.

In the lawsuit, the EEOC sought to recover back pay and liquidated damages for the over 200 individuals who were discriminated against because of their age. Additionally, the EEOC sought injunctive relief designed to fix the situation and prevent age discrimination in the future. In early August 2023, the parties came to an agreement, and the EEOC settled its first bias lawsuit involving AI software. The parties signed a Consent Decree, which confirmed that the defendants would pay $365,000 to be shared among the applicants who were allegedly rejected by the AI hiring software. According to the decree, the money will be split equally between back pay and compensatory damages.

Regarding injunctive relief, the defendants must provide anti-discriminatory and complaint procedures applicable to the hiring, screening, and supervision of tutors and tutor applicants. Second, it was agreed that iTutorGroup would provide yearly training for managers and supervisors involved in the hiring process. Additionally, the EEOC can inspect the records and premises of the defendants and interview employees, agents, independent contractors, and others to ensure compliance.

While this is not a California settlement, this case shows that the EEOC is willing to aggressively prosecute cases in the AI area.  

Contact a California Employment Lawyer

If you are in California and believe you have been discriminated against by AI hiring software, contact a California employment lawyer near you for legal help.