The U.S. Department of Labor has concluded its investigation into Scale AI’s adherence to the Fair Labor Standards Act (FLSA), as confirmed by a source acquainted with the situation.
The FLSA is a federal statute that addresses employee misclassification as independent contractors and issues related to unpaid wages. Scale AI was initially reported as being under investigation by TechCrunch in March.
Additionally, Upwork and Hireart, two HR partners of Scale AI, have confirmed to TechCrunch that they are no longer under investigation by the Department of Labor for FLSA compliance.
Scale AI, which was valued at $13.8 billion last year, employs a large workforce categorized as contractors to perform essential AI tasks such as image labeling for major technology companies.
Former workers have filed lawsuits against Scale AI, claiming they were underpaid and misclassified as contractors rather than employees, which denied them benefits like sick leave.
The reasons for the Department of Labor dropping the investigation are unclear. Scale AI, based in San Francisco, declined to comment, and the Department did not respond to queries.
Recently, the Department of Labor has indicated a more accommodating stance toward classifying workers as contractors. On May 1, the agency announced it would cease enforcing a rule from the Biden administration that made this classification more stringent.
Scale AI is also seeking to align with the Trump administration. CEO Alexandr Wang attended Trump’s inauguration, similar to other tech CEOs, and has published a letter urging Trump to focus on AI development.
Former Scale AI managing director Michael Kratsios was confirmed in March as the director of the White House’s Office of Science and Technology Policy, advising the President on science and technology matters. This position holds no authority over the Department of Labor. Kratsios has not responded to requests for comment.
