AI Recruiting Tools MAY Become Subject to FCRA

A lawsuit developing in California (no surprise there) accuses a “widely-used” AI program of violating both the FCRA and its California counterpart by searching out and compiling “sensitive, individualized personal information” on applicants for positions with clients, without the knowledge or consent of those applicants. This would constitute a violation of the FCRA. This is relevant because of the increasing use of AI in recruiting, as evidenced by a study by LinkedIn that found that over 90 percent of recruiters plan to use AI more extensively in 2026. The amount of data collected by the system is immense, comprising over 1.5 billion data points from tens of millions of people working in a wide variety of industries. Those data – whether or not used to hire a particular candidate – are retained to further train the AI system. The outcome of this lawsuit may add considerable further restrictions to the use of AI in recruiting – already the target of discrimination and privacy lawsuits. Employers using or considering use of AI recruiting tools are advised to pay close attention to these developments.