US Department of Labor Ends Scale AI Fair Pay Investigation

The U.S. Department of Labor has ended its nearly year-long investigation into Scale AI concerning alleged violations of the Fair Labor Standards Act (FLSA), which addresses employee misclassification and unpaid wages. Scale AI, a San Francisco-based artificial intelligence startup valued at approximately $13.8 billion, relies heavily on a contractor workforce for key AI tasks such as image labeling for major tech firms. Despite facing multiple lawsuits from former workers alleging underpayment and misclassification as contractors rather than employees, the DOL has dropped the probe, as have investigations into Scale AI's HR partners Upwork and HireArt. The exact reasons for the DOL's decision remain unclear, though recent agency actions indicate a more lenient stance on contractor classification, including the suspension of enforcement of a Biden-era rule complicating such classifications. Additionally, Scale AI appears to be aligning with the Trump administration, with CEO Alexandr Wang attending Trump's inauguration and the company's former managing director, Michael Kratsios, now serving as director of the White House Office of Science and Technology Policy. Both Scale AI and the DOL declined to comment on the investigation’s closure.