The U.S. Division of Labor (DOL) is investigating the data-labeling startup Scale AI for compliance with the Truthful Labor Requirements Act, Trendster has realized.
That’s a federal legislation that regulates unpaid wages, misclassification of staff as contractors, and unlawful retaliation in opposition to staff.
The investigation has been energetic since at the least August 2024, a doc seen by Trendster reveals. And it’s ongoing, in line with an individual instantly accustomed to the matter.
The mere existence of an investigation doesn’t imply Scale AI has achieved something improper, in fact, and the investigation may discover in favor of the corporate or be dismissed.
Scale AI relies in San Francisco and was valued final 12 months at $13.8 billion. It depends on a military of staff it categorizes as contractors to do important AI work, like labeling photos for Huge Tech and different organizations.
Scale AI spokesperson Joe Osborne advised Trendster that the investigation was initiated throughout the earlier presidential administration and that Scale AI felt that its work constructing, testing, and evaluating AI was misunderstood by regulators then.
Osborne stated that Scale AI has labored extensively with the DOL to clarify its enterprise mannequin and that conversations have been productive. Extra typically, Osborne stated that Scale AI brings extra “versatile work alternatives in AI” to Individuals than every other firm and that suggestions from its contributors is “overwhelmingly optimistic.”
“Tons of of 1000’s of individuals use our platform to showcase their abilities and earn more money,” Osborne stated.
Scale AI is certainly a well-liked gig work platform. Nevertheless it has lately confronted authorized challenges from some ex-workers over its labor practices. Two lawsuits have been filed in opposition to the startup — one in December 2024 and the opposite in January 2025 — from former staff alleging they have been underpaid and misclassified as contractors as an alternative of staff, denying them entry to protections like additional time pay and sick days.
Scale AI has strongly disputed the lawsuits, saying that it absolutely complies with the legislation and works to make sure its pay charges meet or surpass native dwelling wage requirements.
Scale AI’s worldwide labor practices have been additionally the topic of an investigation by the Washington Submit in 2023. Employees abroad described to the Submit demanding work at low pay as contractors. The corporate stated on the time that pay charges have been frequently bettering.
The U.S. Division of Labor’s web site says it is ready to resolve most circumstances administratively however that employers who violate the legislation could also be topic to fines and probably imprisonment. The DOL additionally has the ability to power employers to reclassify their staff as staff.
For instance, in February 2024, resort staffing startup Qwick settled a DOL case by paying $2.1 million and asserting that each one California staff performing work utilizing the Qwick app could be categorised as staff, Bloomberg Regulation reported.
Scale AI additionally seems to be among the many Silicon Valley corporations searching for and seeing favor with the brand new presidential administration. Its CEO and founder Alexandr Wang, as an illustration, attended Donald Trump’s inauguration in January like many different tech CEOs.
Extra telling, Scale AI’s former managing director, Michael Kratsios, is President Trump’s nominee as new director of the White Home’s Workplace of Science and Know-how Coverage. Kratsios beforehand served because the U.S.’s chief expertise officer throughout the first Trump administration.
On this place, Kratsios will advise Trump on science and expertise issues. This place has no oversight over the Division of Labor. Kratsios was a part of a Senate listening to on February 25 however has not been confirmed but. Kratsios didn’t reply to a request for remark.
U.S. Division of Labor spokesperson Michael Petersen advised Trendster that it can’t verify or deny the existence of any investigation, per long-standing coverage.
