Recently, Scale AI, a leading company in the field of artificial intelligence data labeling, is facing in-depth investigations from the US Department of Labor. The core of the investigation is whether the company strictly complies with the Fair Labor Standards Act (FLSA). This federal law mainly regulates key labor rights issues such as wage payment, employee classification and prevention of illegal retaliation.
According to TechCrunch, the investigation began in August 2024 and is still in progress. It should be clear that the investigation itself does not mean that Scale AI has violated the law, and the end result may be beneficial or disadvantageous to the company.
San Francisco-based Scale AI was valued at $13.8 billion last year. The company mainly relies on a large number of labor force classified as contractors to perform key AI work such as image annotation, serving many large technology companies and other organizations. Scale AI spokesman Joe Osborne said the investigation was launched during the previous presidential administration and he believed regulators had misunderstandings about the company's business model. Osborne stressed that Scale AI had extensive communication with the Department of Labor, working to explain its business model, and said the exchange was going well. He also noted that Scale AI offers Americans more flexible job opportunities than other companies, saying feedback from contributors is “overwhelmingly positive.”
However, Scale AI also faces some legal challenges. Recently, a former employee filed a lawsuit against his labor practice, accusing him of not paying wages and misclassification, resulting in his inability to enjoy protection such as overtime wages and sick leave. In response, Scale AI firmly denies it, emphasizing that it complies with the law fully and is committed to ensuring that the payment standards meet or exceed the local living wage standards.
In addition, Scale AI has also received attention in international labor practice. In 2023, the Washington Post conducted a survey on the working conditions of its overseas employees, and reports showed that some contractors said they were lower salaries. In response, Scale AI said that the salary level is continuing to improve.
The U.S. Department of Labor said most cases can be resolved administratively, but employers may face fines or even imprisonment if they violate the law. The Department of Labor can also force employers to reclassify contractors as employees. For example, in February 2024, hotel human resources startup Qwick reached a settlement with the Department of Labor, paying $2.1 million and announced that all workers in California will be reclassified as employees.
It is worth noting that Scale AI seems to have received some support in the new presidential administration. Its CEO and founder Alexander Wang attended Trump's inauguration, and former managing director Michael Kratz Oss was nominated as the new director of the White House's Office of Science and Technology Policy.
Key points:
Scale AI was investigated by the U.S. Department of Labor for complying with the Fair Labor Standards Act.
The company faces lawsuits from former employees, alleging that it fails to pay wages and misclassifies contractors.
Scale AI said it actively communicated with the Ministry of Labor and insisted that it complies with relevant laws.