The Labor Department has closed its probe into Scale AI after months of reviewing its worker classification practices
A source directly familiar with the situation claims the U.S. Department of Labor has abandoned its inquiry into Scale AI’s adherence to the Fair Labor Standards Act.
A federal statute, the FLSA, governs unpaid wages and employee misclassification as independent contractors. In March, TechCrunch initially revealed that Scale was the focus of such an inquiry.
Upwork and Hireart, two of Scale AI’s HR partners under FLSA compliance per Inc. magazine, are no longer under DOL investigation; they verified to TechCrunch.
Valued at $13.8 billion last year, Scale AI relies on an army of workers it classifies as contractors to do vital AI tasks, including picture categorization for Big Tech.
However, Scale has been sued by former employees, who claimed they were misclassified as contractors rather than employees, depriving them of access to benefits, including sick leave.
The precise cause of the termination of the DOL investigation is unknown. While the DOL ignored a request for comment, San Francisco-based Scale AI refused to speak.
Still, there are various plausible explanations.
A recent DOL action suggests a more friendly attitude toward categorizing employees as contractors; the agency said on May 1 that, at least for now, it was not enforcing a Biden-era rule, making this more challenging.
Scale AI is also trying to win over the Trump government. Like many other tech CEOs, its CEO Alexandr Wang went to Trump’s inauguration and has written a letter asking Trump to “win the AI war.”
On the other hand, Michael Kratsios, former managing director of Scale AI, was verified in March as the new White House Office of Science and Technology Policy director.
The job has no control over the DOL and includes advising the President on science and technology matters. Kratsios did not quickly answer a query for comment.
