EEOC Settles Case Concerning Discrimination by AI Recruiting Software

August 22, 2023

The U.S. Equal Employment Opportunity Commission (EEOC) recently settled a lawsuit against a major online tutoring company. As a result, the company must pay $360,000 due to accusations of discriminating against older applicants. The suit revealed that the company programmed its recruiting software’s algorithm to eliminate applications from women aged 55 or older and men aged 60 or older.

The agency learned about this discrimination when an applicant claimed she received an immediate denial after applying with her actual birth date. This applicant applied with identical information and a different birth date the next day. According to the suit, she received an interview for the second application.

However, the company refuted all allegations during the settlement. It also disputed claims by the EEOC that its tutors are employees affected by the Age Discrimination in Employment Act of 1967 (ADEA). Instead, the company maintained its stance that all tutors are independent contractors.

The settlement agreement stipulates that the tutoring company must accomplish the following:

  • Provide public notice about the settlement
  • Create new anti-discrimination policies and complaint handling
  • Provide appropriate training for managers
  • Report to the EEOC, and
  • Supply monetary relief to those impacted through the $365,000 payout.

This case further fueled cautions issued by the EEOC. For example, the agency warned that AI and algorithmic employment screening tools may perpetuate ageism, sexism, racism, and other biases in hiring. As proven in this suit, it can and does happen. The lawsuit alleged that these screening tools could cause employers to violate anti-discrimination rules. 

The EEOC has warned employers that AI tools could screen out applicants with disabilities based on inaccessibility. They advise companies using these tools to frequently self-evaluate to determine if their screening programs could result in discriminatory hiring practices. Furthermore, employers not involved in the tools’ development may find themselves liable for any discrimination from the tools’ use.

Any employer that utilizes AI or algorithmic screening tools should do their due diligence. For example, they should ask vendors to supply data on whether the tools screen out applicants from protected groups at higher rates. They should also check the accuracy of the information and whether the screening tool still perpetuates bias. The EEOC could hold the employer responsible for the results in either scenario.

Employers should stay abreast of the latest concerns in algorithm-based hiring tools to comply with EEOC’s recommendations. One way to ensure compliance is by partnering with a background check provider. The right partner can help businesses stay mindful of anti-discrimination rulings and avoid mistakes. While implementing AI or algorithmic screening programs may save time for HR, it is no substitute for a well-informed and helpful background screening partner.

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