On Sept. 18, 2018, the American Civil Liberties Union (ACLU) filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) against Facebook with respect to Facebook’s employment advertising practices, the result of which could have major implications in the way companies use big data. This case illuminates a legal issue that is rapidly evolving into an area of exposure for the way in which companies who utilize big data technology target their intended audience. Companies that wish to continue their big data practices must ensure that they carefully evaluate their use of these technological tools to avoid lawsuits and regulatory ire for potentially discriminatory conduct.

What Is Big Data?

We begin with the fundamental question: What is big data? Big data has been described as “extensive datasets—primarily in the characteristics of volume, velocity, and/or variability—that require a scalable architecture for efficient storage, manipulation, and analysis.” What Is Big Data?, University of Wisconsin, Data Science (2018). In the consumer context, an online retailer might use big data analytics to mine your online purchase history to help predict what your next purchase will be and provide advertisements for products the retailer predicts you might buy. In the employment context, companies might use big data algorithms to find job applicants with a better chance of generating a positive job performance. In the ACLU’s case most recent case against Facebook, the issue centers on the alleged use of big data to target specific consumer groups for employment opportunities.

The EEOC Complaint

The ACLU, on behalf of three individuals and a putative class comprised of the Communications Workers of America (the plaintiffs), filed a charge against Facebook and 10 Facebook employers, alleging that Facebook’s employment advertising algorithm unlawfully discriminated on the basis of age and gender in violation of Title VII of the Civil Rights Act (the charge). See Facebook EEOC Complaint—Charge of Discrimination, ¶ 2, American Civil Liberties Union (Sept. 18, 2018). The charge alleges that Facebook used big data algorithms to purposely exclude women, non-binary users, and older workers from receiving certain employment advertisements. According to the allegations in the charge, Facebook then created and sent advertisements strictly to young men for employment in male-dominated fields. See id. at ¶ 4. The plaintiffs’ claims rest on their classification of Facebook as both an employer and an employment agency. See id. at ¶ 2. As such, Facebook allegedly targeted and sent job advertisements as well as recruitment and hiring opportunities to male Facebook users as prospective job applicants. See id. According to the plaintiffs’ allegations, this targeted advertising purportedly excluded female prospective job applicants in violation of Title VII. See id.

The plaintiffs allege that Facebook’s account opening procedures facilitated the use of big data in a discriminatory manner. See Facebook EEOC Complaint—Charge of Discrimination, ¶¶ 22-24, American Civil Liberties Union (Sept. 18, 2018). Those procedures require all new users to identify their gender and age when opening an account. See id. Plaintiffs allege that Facebook uses this stored information in its advertising platform, which, “enables, encourages, and assists employers to target advertisements and recruitment based on the user’s gender, by allowing advertisers to select either ‘All,’ ’Male,’ or ‘Female’ users to receive the ad.” See id. at ¶ 3. The plaintiffs also allege that this use of big data with respect to users’ personal information results in a discriminatory effect against female and older users. See id. As a result, the plaintiffs are seeking monetary damages as well as injunctive relief. See id. at ¶ 64.

Title VII of the Civil Rights Act of 1964

Section 703(a) of Title VII addresses discriminatory employer practices:

It shall be unlawful employment practice for an employer: (1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or (2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.

42 U.S.C. §2000e-2(a) (1964).

Section 703(b) of Title VII, meanwhile, addresses discriminatory employment agency practices:

It shall be an unlawful employment practice for an employment agency to fail or refuse to refer for employment, or otherwise to discriminate against, any individual because of his race, color, religion, sex, or national origin, or to classify or refer for employment any individual on the basis of his race, color, religion, sex, or national origin.

42 U.S.C. §2000e-2(b) (1964).

Here, the plaintiffs’ claims are based on both §703(a) and (b), as the charge alleges Facebook: (1) by allowing employers to post job advertisements through Facebook, acts as an employment agency because it regularly undertook procurement of employment opportunities for employers through its advertising platform in return for compensation, and is allegedly involved in the entire employment advertisement process from ad creation to connecting employers to potential applicants; and (2) is acting as an employer because Facebook is engaged in an industry affecting commerce who has 15 or more employees. See Facebook EEOC Complaint—Charge of Discrimination, ¶¶ 19, 25, American Civil Liberties Union (Sept. 18, 2018). Plaintiffs further allege that because Facebook meets Title VII’s definition of employer and employment agency, Facebook’s conduct is under the purview of Title VII’s protections against discrimination. See id. at ¶ 61-62.

Facebook’s Alleged Misstep

As advertisements account for much of Facebook’s revenues it should come as no surprise that Facebook is attempting to maintain flexibility with what options the company provides to its advertising clients. See Prasad Ramesh, ACLU Sues Facebook for Enabling Sex and Age Discrimination Through Targeted Ads, Packtpub (Sept. 19, 2018). Indeed, by allowing advertising clients to target their advertisements to their desired demographics, advertisers are more likely to maximize the return on their advertising dollar. Id. The EEOC, however, previously issued warnings about how the use of big data in recruitment and screening could violate Title VII.

According to the charge, Facebook may have overlooked the EEOC’s warnings in an attempt to provide advertising flexibility to the company’s clients. In allowing employers to choose who does and does not see their advertisements, the charge alleges that Facebook may have run afoul of Title VII. Id. The ACLU’s new lawsuit, however, is not the first time Facebook has come under scrutiny for their advertising practices. In October 2016, Pro Publica, an online investigative journalism agency, released a report that alleged Facebook allowed advertising clients to target consumers for housing advertisements based on that Facebook user’s ethnicity. See Xavier Harding, ACLU Files Discrimination Charges Against Facebook for Serving Job Posts to Only Men, Mic (Sept. 18, 2018).

Further, the Department of Housing and Urban Development (HUD) filed a complaint against Facebook in August 2018 claiming Facebook’s advertisement platform allowed advertisers to restrict who received housing advertisements based upon their race, color, religion, sex, familial status, national origin, and disability. See Kevin Kelleher, Facebook Ads ‘Unlawfully Discriminate’ by Race, Gender, Disability, HUD Complaint Charges, Fortune (Aug. 17, 2018). The HUD’s complaint further alleged that the discriminatory advertising was made possible by Facebook’s utilization of big data to classify Facebook users based upon protected characteristics. Id. Thereafter, Facebook announced it would seek to resolve the discriminatory advertising effects of their big data algorithms by removing over 5,000 ad-targeting options available to their advertising clientele, which included targeting factors such as ethnicity or religion. See Jonathan Vanian, ACLU, Labor Union, Allege Facebook’s Ad Targeting Discriminates By Gender, Fortune (Sept. 18, 2018).

Notwithstanding this negative publicity, by allowing clients advertising employment opportunities to target demographics, the charge alleges that Facebook may have engaged in similarly discriminatory practices through its advertising algorithms. See generally Facebook EEOC Complaint—Charge of Discrimination, American Civil Liberties Union (Sept. 18, 2018).

Facebook denied the plaintiffs’ allegations in a statement by Spokesman Joe Osborne, which stated, “[Discrimination is] strictly prohibited in our policies, and over the past year, we’ve strengthened our systems to further protect against misuse … [w]e are reviewing the complaint and look forward to defending our practices.” See Janet Burns, ACLU Lawsuit Says Facebook’s Targeted Jobs Exclude Women, Older Men, Forbes (Sept. 20, 2018).

Implications for Companies Using Big Data in Recruiting

Companies using big data as a means to better reach their intended consumer may still do so. The Internet has matured, and increased regulation of cyber activity has coupled with existing consumer protection laws to create a modern paradigm: companies involved in online employment activities must now contend with a host of legally-sophisticated issues.

• Whether a company has been implementing big data as part of its marketing and hiring strategies with seemingly no issues, or a company seeks to begin utilizing the benefits of big data, the plaintiffs’ suit against Facebook should come as a cautionary tale: commercial big data practices create potential vulnerabilities for inadequately prepared companies.

• A company’s adoption of procedures designed to limit the disparate impact of consumer targeted advertisements will be indispensable towards limiting exposure to lawsuits. This means not only adopting preventative measures to ensure compliance with federal and state anti-discrimination laws when launching certain marketing and employment practices, but also remaining diligent to ensure conduct that appears non-discriminatory on its face does not in fact have a discriminatory impact.

• Enacting express procedures for marketing and employment practices that use big data will help companies maintain a transparent company-wide policy that limits exposure to lawsuits. For Facebook, by example, this means the company may be required to narrow advertisement targeting options for their clientele, and may require their advertising clients to provide additional disclosures and assurances about their advertising efforts to ensure these efforts will not have a discriminatory effect. See Greg Sterling, Facebook Job Ads Excluded Women, ACLU Complaint Says, Marketing Land (Sept. 18, 2018).

As the use of big data analytics becomes more prevalent in the screening and recruiting of employees, companies and practitioners must maintain a vigilant watch and think creatively as to how older laws like Title VII might apply to new technology like big data analytics. If there is any question, companies should consult their inside or outside employment counsel to ensure that any current or anticipated recruiting or candidate screening initiatives do not open the door to discrimination claims. In this rapidly changing area of the law, a company will want to avoid spooking investors by becoming the next test case for novel EEOC claims.

Robert O. Sheridan is of counsel and Bret A. Cohen is a partner at Nelson Mullins. Timothy Harvey, an associate at the firm, assisted in the preparation of this article.