DOL Ends Investigation into Scale AI's Labor Practices
The U.S. Department of Labor (DOL) has closed its investigation into Scale AI's compliance with the Fair Labor Standards Act (FLSA), according to a source familiar with the matter. The investigation, initially reported by TechCrunch in March, examined whether Scale AI misclassified workers as independent contractors and violated wage regulations.
The DOL also investigated Scale AI's HR partners, Upwork and Hireart, for FLSA compliance. Both companies confirmed to TechCrunch that the investigations concerning them have also been dropped.
Scale AI, valued at $13.8 billion last year, relies heavily on contractors for data labeling and other AI-related tasks. The company has faced lawsuits from former workers alleging misclassification and underpayment, denying them benefits like sick leave.
The reason for the DOL dropping the investigation remains unclear. Scale AI declined to comment, and the DOL did not respond to a request for comment.
Possible Reasons for the Dropped Investigation
Several factors could have contributed to the DOL's decision. The agency recently signaled a more lenient approach to worker classification by suspending enforcement of a Biden-era rule that made it harder to classify workers as contractors. This new stance might have influenced the outcome of the Scale AI investigation.
Scale AI CEO Alexandr Wang has engaged with the Trump administration, attending the former president's inauguration and urging investment in AI. Additionally, Scale AI's former managing director, Michael Kratsios, was confirmed as the director of the White House Office of Science and Technology Policy in March. While this position doesn't oversee the DOL, it highlights Scale AI's connections within the administration.
It's important to note that the DOL's decision to drop the investigation doesn't necessarily exonerate Scale AI. The company still faces ongoing lawsuits related to worker classification and pay practices.