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Scale AI faces probe amid allegations that it's underpaying its data labeling contractors - SiliconANGLE

Mar 07, 2025 - siliconangle.com
Scale AI Inc., a data labeling startup, is under investigation by the U.S. Department of Labor for potential violations of the Fair Labor Standards Act, which covers fair pay and working conditions. The probe, initiated during Joe Biden's presidency, examines whether Scale AI is underpaying its data labeling contractors and misclassifying them as contractors instead of employees. The company, which provides AI training datasets, disputes these allegations, asserting compliance with the Act and emphasizing its commitment to providing a living wage and timely payments. Despite previous scrutiny over labor practices and recent lawsuits from former workers, Scale AI maintains that it offers flexible work opportunities and has received positive feedback from contributors.

Scale AI's connections to the government, particularly under President Donald Trump, have been beneficial, as evidenced by a recent multimillion-dollar contract with the U.S. Department of Defense to train AI agents for military use. The company's founder, Alexandr Wang, and former managing director, Michael Kratsios, have ties to the Trump administration, with Kratsios nominated for a key technology advisory role. While the Department of Labor typically resolves cases administratively, it retains the authority to prosecute and impose penalties on employers who violate labor laws.

Key takeaways:

  • Scale AI is under investigation by the U.S. Department of Labor for potential violations of the Fair Labor Standards Act, focusing on fair pay and working conditions.
  • The company disputes allegations of underpaying or mistreating its contributors, claiming compliance with the Fair Labor Standards Act and emphasizing timely payments.
  • Scale AI has faced previous scrutiny for labor practices, including complaints of low pay from overseas contributors and lawsuits from former workers alleging misclassification and underpayment.
  • The company has strong ties to the Trump administration and recently secured a multimillion-dollar contract with the U.S. Department of Defense for AI training.
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