Court Issues Final Consent Decree in AI Discriminatory Hiring Lawsuit

On September 11th, 2023, the U.S. Equal Employment Opportunity Commission (EEOC) announced that the agency reached a final settlement and consent decree in a recent discriminatory hiring lawsuit involving artificial intelligence (AI) hiring technologies. The company, a tutoring service offering English-language tutoring to Chinese students, will pay $365,000 and furnish other relief to rejected applicants. Employers’ growing use of AI tools in hiring and other employment decisions has come under fire recently under state and local laws, as well as federal guidance and lawmaking. In May 2023, the EEOC issued guidance on using such AI tools in hiring decisions.

Recap of the Discriminatory Hiring Case

According to the EEOC’s investigation, the employer hired English-language tutors in the U.S. to provide remote online tutoring services from their homes. The lawsuit alleges that the company programmed its AI hiring software to automatically reject female applicants aged 55 or older and male applicants aged 60 or older. This practice violates the Age Discrimination in Employment Act of 1967 (ADEA). Specifically, the ADEA prohibits employers from discriminating against employees and applicants 40 years of age and older.

AI Discriminatory Hiring and Recent Guidance

While using AI in hiring decisions can help with a variety of employment matters, there is a risk of discrimination. Using automated systems for evaluating and filtering candidates, monitoring employee performance, and determining pay or promotions can inadvertently discriminate against otherwise qualified candidates based on protected classes. Without proper independent audits and other safeguards, AI systems may risk violating federal civil rights laws. According to recent guidance from the EEOC, employers should do the following to avoid AI discrimination:

• Conduct self-analyses of AI tools on an ongoing basis to determine whether their employment practices have a disproportionately large negative effect on protected classes.
• Perform an independent bias audit on the AI tools they use.
• Take additional steps to reduce the adverse impact on protected classes or select a different tool in order to avoid discriminatory hiring practices.

Final Consent Decree, Settlement, and Other Relief

The EEOC filed suit in EEOC v. iTutorGroup, Inc., et al. In its decision, the United States District Court for the Eastern District of New York (the Court) issued a consent decree and a settlement of $365,000. The sum will be distributed to 200 applicants who are claimants under the suit. The company has since ceased from hiring tutors in the U.S. However, the consent decree provided for additional non-monetary relief against the employer designed to further prohibit discriminatory hiring and other EEO law violations. The non-monetary relief under the consent decree includes:

• Continued extensive discrimination training;
• A requirement to implement a new anti-discrimination policy;
• Injunctions against discriminatory hiring based on age and sex; and
• A prohibition against asking applicants’ birth dates before making a job offer.

Under the consent decree, the EEOC will monitor the employer’s activities for at least the next five years. The EEOC may extend this timeframe if the company resumes hiring tutors in the U.S. If the company does resume hiring U.S. applicants for tutoring positions, it must first notify and interview those applicants it previously rejected because of age.