The U.S. Department of Labor (DOL) is investigating the data-labeling startup Scale AI for compliance with the Dazzling Labor Requirements Act, TechCrunch has realized.
That’s a federal legislation that regulates unpaid wages, misclassification of workers as contractors, and unlawful retaliation towards workers.
The investigation has been crammed with life since as a minimal August 2024, a doc considered by TechCrunch shows. And it’s ongoing, according to a particular person right away conscious of the topic.
The mere existence of an investigation doesn’t point out Scale AI has executed one thing else repulsive, for certain, and the investigation would per chance also net in prefer of the firm or be pushed aside.
Scale AI is essentially based totally in San Francisco and was once valued final 365 days at $13.8 billion. It relies on an navy of workers it categorizes as contractors to enact critical AI work, esteem labeling pictures for Mighty Tech and other organizations.
Scale AI spokesperson Joe Osborne told TechCrunch that the investigation was once initiated all around the old presidential administration and that Scale AI felt that its work constructing, checking out, and evaluating AI was once misunderstood by regulators then.
Osborne acknowledged that Scale AI has worked broadly with the DOL to expose its industry mannequin and that conversations were productive. More on the entire, Osborne acknowledged that Scale AI brings more “flexible work alternatives in AI” to Individuals than every other firm and that recommendations from its contributors is “overwhelmingly optimistic.”
“Quite so much of of thousands of oldsters use our platform to showcase their talents and salvage more cash,” Osborne acknowledged.
Scale AI is certainly a regular gig work platform. But it has now not too prolonged previously faced accurate challenges from some ex-workers over its labor practices. Two complaints were filed towards the startup — one in December 2024 and the opposite in January 2025 — from ancient workers alleging they were underpaid and misclassified as contractors as adverse to workers, denying them salvage accurate of entry to to protections esteem previous customary time pay and ill days.
Scale AI has strongly disputed the complaints, asserting that it fully complies with the legislation and works to invent obvious its pay charges meet or surpass local residing wage requirements.
Scale AI’s international labor practices were also the field of an investigation by the Washington Put up in 2023. Workers out of the country described to the Put up anxious work at low pay as contractors. The firm acknowledged at the time that pay charges were continuously improving.
The U.S. Department of Labor’s net space says it’s able to solve most cases administratively nonetheless that employers who violate the legislation would per chance even be field to fines and potentially imprisonment. The DOL also has the energy to force employers to reclassify their workers as workers.
As an illustration, in February 2024, hotel staffing startup Qwick settled a DOL case by paying $2.1 million and asserting that each and every California workers performing work using the Qwick app would per chance be categorised as workers, Bloomberg Regulation reported.
Scale AI also appears to be amongst the Silicon Valley corporations attempting for and seeing prefer with the recent presidential administration. Its CEO and founder Alexandr Wang, as an illustration, attended Donald Trump’s inauguration in January esteem many other tech CEOs.
More telling, Scale AI’s ancient managing director, Michael Kratsiosis President Trump’s nominee as recent director of the White Home’s Office of Science and Technology Coverage. Kratsios previously served because the U.S.’s chief expertise officer all around the main Trump administration.
In this space, Kratsios will portray Trump on science and expertise matters. This space has no oversight over the Department of Labor. Kratsios was once part of a Senate listening to on February 25 nonetheless has now not been confirmed but. Kratsios didn’t retort to a quiz for comment.
U.S. Department of Labor spokesperson Michael Petersen told TechCrunch that it’ll’t verify or issue the existence of any investigation, per prolonged-standing coverage.
Charles Rollet is a senior reporter at TechCrunch. His investigative reporting has resulted in U.S. government sanctions towards four tech corporations, including China’s largest AI firm. Outdated to becoming a member of TechCrunch, Charles lined the surveillance industry for IPVM. Charles is essentially based totally in San Francisco, the set he enjoys mountaineering with his dogs. You would possibly want to additionally contact Charles securely on Signal at charlesrollet.12 or +1-628-282-2811.
