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The U.S. Department of Labor ( DOL ) is investigating the data - labeling startup Scale AI for compliance with the Fair Labor Standards Act , TechCrunch has learned .
That ’s a Union legal philosophy that regulates unpaid wages , misclassification of employees as contractor , and illegal retaliation against workers .
The investigation has been alive since at least August 2024 , a papers seen by TechCrunch shows . And it ’s on-going , according to a soul directly intimate with the matter .
The mere world of an investigating does n’t stand for Scale AI has done anything wrong , of course of study , and the investigating could find in party favor of the companionship or be dismissed .
Scale AI is base in San Francisco andwas valued last year at $ 13.8 billion . It relies on an army of workers it categorize as declarer to do essential AI work , like labeling simulacrum for Big Tech and other arrangement .
Scale AI spokesperson Joe Osborne tell apart TechCrunch that the investigation was initiate during the previous presidential administration and that Scale AI felt that its work construction , testing , and evaluating AI was misunderstood by regulators then .
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“ Hundreds of thousands of masses utilize our political program to showcase their skills and pull in supernumerary money , ” Osborne said .
Scale AI is indeed a popular gig work weapons platform . But it has recently face sound challenge from some ex - workers over its Labour practices . Two lawsuits were filedagainst the startup — one in December 2024 and the other in January 2025 — from former worker alleging they were underpaid and misclassified as contractors alternatively of employee , denying them access to protections like overtime pay and sick mean solar day .
Scale AI has strongly disputed the suit , say that it full complies with the police and works to ensure its pay rates meet or surpass local sustenance wage banner .
Scale AI ’s international labor practices were also the subject field of an investigation by theWashington Post in 2023 . Workers overseas described to the Post demanding work at down pay as contractors . The company allege at the time that earnings rates were continually improve .
The U.S. Department of Labor’swebsitesays it is able to resolve most causa administratively but that employers who violate the legal philosophy may be open to fines and potentially internment . The DOL also has the major power to force employer to reclassify their workers as employees .
For exemplar , in February 2024 , hotel staffing startup Qwick settled a Labor Department example by paying $ 2.1 million and announcing that all California workers perform piece of work using the Qwick app would be classified as employee , Bloomberg Lawreported .
Scale AI also appear to be among the Silicon Valley firms attempt and seeing favour with the new presidential administration . Its chief executive officer and founder Alexandr Wang , for example , attendedDonald Trump ’s inauguration in Januarylike many other technical school chief executive officer .
More telling , Scale AI’sformer managing managing director , Michael Kratsios , is President Trump ’s nominee as new director of the White House ’s Office of Science and Technology Policy . Kratsios antecedently served as the U.S. ’s primary technology policeman during the first Trump judicature .
In this position , Kratsios will advise Trump on scientific discipline and technology matters . This position has no oversight over the Department of Labor . Kratsios was part of a Senatehearingon February 25 but has not been corroborate yet . Kratsios did n’t respond to a postulation for input .
U.S. Department of Labor interpreter Michael Petersen told TechCrunch that it can not confirm or traverse the universe of any investigation , per long - standing policy .
