News Summary

Scale AI, a San Francisco-based data-labeling startup valued at $13.8 billion, is under investigation by the U.S. Department of Labor (DOL) for compliance with the Fair Labor Standards Act. The investigation, which has been ongoing since at least August 2024, is examining issues such as unpaid wages, employee misclassification, and potential illegal retaliation against workers. Scale AI, which categorizes many of its workers as contractors, has faced legal challenges from former workers alleging misclassification and underpayment. Despite these legal issues, Scale AI maintains that it fully complies with labor laws and offers competitive pay rates. In addition, Scale AI has been actively engaging with the DOL to clarify its business model and labor practices. The company has previously faced scrutiny over its international labor practices as well. The investigation is part of a broader trend of increased regulatory scrutiny on gig economy companies regarding their labor practices.