Your AI Hiring Vendor’s Score Could Become Your Background-Check Problem
Many owners assume that when an AI hiring vendor scores applicants, any legal risk in that score belongs to the vendor.
Where the Assumption Breaks
That assumption is now being tested in court, and the employer’s own paperwork is where it can fail. A ranking no one at the company can explain is a weak foundation for a rejection.
The Lawsuit Behind the Question
In Kistler v. Eightfold AI Inc., a proposed class action filed in California this year, job applicants allege that an AI vendor’s match scores and rankings are consumer reports and that the vendor did not obtain the certifications the law requires from the employers using them. These are allegations, not findings.
Why the Employer Is Not a Bystander
California’s Investigative Consumer Reporting Agencies Act reaches reports that gather information on a person’s character, general reputation, personal characteristics, or mode of living by any means (Civ. Code § 1786.2(c)). Before obtaining one for hiring, the employer must give a clear, standalone written disclosure and get written authorization (Civ. Code § 1786.16(a)(2)).
Liability under Civ. Code § 1786.50 reaches the user of the report, not only the agency that prepared it, with damages of at least $10,000 per affected person outside class actions, plus attorney fees. Whether a particular AI score counts as an investigative report is unsettled, and it turns on what the tool gathers and how the business uses it.
What a Small Hiring Team Should Look At
Read the vendor agreement. Then look at what your applicants were told before the tool ran.
A business that uses a scoring tool without asking what data it pulls, or that rejects applicants based on a ranking it cannot explain, carries exposure the vendor cannot absorb on its behalf. Our page on background checks and hiring decisions for employers covers the related discrimination risk.
If an AI tool screens or ranks your applicants, the disclosures your business gave, or never gave, may decide where the liability lands. That is what a first conversation is for.
Contact Michael Trust Law, APC for a no-charge initial consultation. The facts determine what needs to be addressed – and how much of a conversation that takes.
This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts – no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication.