We previously reported here on the U.S. Equal Employment Opportunity Commission’s (EEOC) lawsuit alleging that a group of affiliated employers engaged in age discrimination through the use of artificial intelligence technology. The case has now been settled by the parties without any major rulings from the court on the novel issues surrounding technology use in hiring and employment decision making. Nonetheless, the settlement provides insight into the EEOC’s continued pursuit of technology-related claims.
Background on EEOC v. iTutor
In May 2022, the EEOC filed a lawsuit under the Age Discrimination in Employment Act (ADEA) against a set of affiliated companies that employ the services of English-language tutors. The EEOC alleged that from late March to early April 2020, the employers intentionally discriminated against older applications by programming application software to automatically reject female applicants over age 55 and male applicants over age 60 based on date of birth information collected in the application process. This technological screening purportedly impacted over 200 applicants, denying them equal employment opportunities because of their age.
The Sweeping Settlement
Employers should be aware that settlement agreements with the EEOC differ significantly from settlements of lawsuits brought by plaintiffs with private legal counsel. As a routine matter, the EEOC requires employers to agree to terms beyond a monetary settlement amount, typically involving entry of an injunction to stop engaging in conduct the EEOC deems unlawful, issuance of notice to employees or former employees, employee handbook and policy revisions, management training, and a period of time permitting EEOC to monitor compliance. The nature and scope of the non-monetary terms parties agree to varies depending on the facts and claims at issue. These terms, along with the monetary amount of the settlement, do not remain confidential. Instead, they become part of a consent decree that is filed with the court and made an enforceable order upon the court’s approval.
On August 9, 2023, the parties to the EEOC v. iTutor lawsuit jointly submitted a proposed consent decree for court approval outlining the terms of their settlement agreement. For a class of potentially 200 rejected applicants spanning approximately one-month of time, the employers agreed to pay $365,000. This equates to a value of $1,825 per rejected applicant—a relatively small sum per person.
However, the real extraction EEOC gleaned from the employers comes in the form of the sweeping non-monetary terms of the settlement agreement. The employers will be required to provide notice of the lawsuit and resolution to high-level executives and human resource employees, create and distribute a memo describing prohibitions on age and sex discrimination in hiring (despite the fact that the lawsuit did not even claim sex discrimination), make detailed changes to their anti-discrimination policies and internal complaint procedures (which include eleven separate topics “at a minimum”), retain a third-party to conduct extensive training on all federal equal opportunity employment laws, and invite all applicants rejected through use of the software to reapply (along with a providing a detailed report to the EEOC regarding anyone who elects to reapply). The employers are subject to extensive EEOC monitoring and reporting obligations for a period of five years.
Concluding Thoughts
Given the broad terms of the consent decree, EEOC will likely be emboldened by its success with the iTutor settlement. With the filing of this case, and issuance of related artificial intelligence guidelines, the EEOC has signaled its intent to scrutinize and challenge use of technology in employment decision-making. It is not inevitable that employers facing lawsuits from the EEOC will be forced into similar settlements—various factors go into a settlement, including the employer’s budget and willingness to engage in defending itself against the claims. However, EEOC will point to the scope of the iTutor settlement when litigating and negotiating future technology-based claims. Employers using software to aid in decision making should critically assess the use of the technology to ensure they are not in violation of employment laws.
Whether using technology or not, the iTutor case is a good reminder that employers should not be collecting information about birthdays or age on applications or during the hiring process. Employers can ask applicants to confirm they meet the minimum age for the position that may be required by law (i.e., check a box to confirm they are age 18 or older). Specific demographic information cannot and should not be used in making hiring decisions, and only serves to open the employer to potential accusations that the information collected was unlawfully considered in the hiring process.
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