Department of Labor Concludes Investigation of Scale AI

The U.S. Department of Labor has completed its investigation into Scale AI’s adherence to the Fair Labor Standards Act, according to a source familiar with the matter.

The Fair Labor Standards Act (FLSA) is a federal law addressing issues related to the misclassification of employees as independent contractors and the payment of wages. TechCrunch initially reported on Scale’s investigation back in March.

Upwork and Hireart, two HR partners for Scale AI who were under scrutiny regarding FLSA compliance according to Inc. magazine, have confirmed to TechCrunch that they are no longer being investigated by the DOL.

Last year, Scale AI was valued at $13.8 billion and utilizes a contractor workforce to execute essential AI tasks, including image labeling for major tech companies.

However, the company faces lawsuits from former employees who claim underpayment and misclassification, which led to missed benefits such as sick leave.

The reasons behind the DOL’s decision to conclude the investigation remain unclear. Scale AI, based in San Francisco, chose not to comment, and the DOL has not responded to requests for information.

Several factors could have contributed to this outcome.

A recent decision by the DOL suggests a potentially more lenient stance on classifying workers as contractors, as the agency announced on May 1 that it will not enforce a Biden-era rule that complicated this classification.

Scale AI is also making efforts to align itself with the Trump administration. CEO Alexandr Wang attended Trump’s inauguration with other tech leaders and has written a letter urging Trump to “win the AI war.”

Moreover, Scale AI’s former managing director, Michael Kratsios, was appointed in March as the new director of the White House’s Office of Science and Technology Policy.

This role entails advising the President on scientific and technological matters but does not oversee the DOL. Kratsios has not yet responded to a request for comment.