The U.S.
Department of Labor has dropped its investigation into Scale AIs compliance with the Fair Labor Standards Act (FLSA), according to a source directly familiar with the matter.The FLSA is a federal law that regulates misclassification of employees as independent contractors and unpaid wages.
A Technology NewsRoom first reported that Scale was the subject of such an investigation in March.Upwork and HireArt, two of Scale AIs HR partners that were also being investigated for FLSA compliance per Inc.
magazine, are also no longer being investigated by the DOL, they each confirmed to A Technology NewsRoom.Scale AI, which was valued last year at $13.8 billion, depends on an army of workers it categorizes as contractors to do critical AI work, like labeling images for Big Tech.However, Scale has been sued by ex-workers alleging they were underpaid and misclassified as contractors instead of employees, denying them access to benefits like sick leave.Its not clear exactly why the DOL dropped the probe.
San Francisco-based Scale AI declined to comment.
Updated on May 9, 2025 Scale AI confirmed this news post-publication, with spokesperson Joe Osborne telling A Technology NewsRoom its pleased with the DOLs decision:Techcrunch eventBerkeley, CA|June 5BOOK NOWWere pleased with this update, Osborne said.
Creating new forms of work in AI is vital to Americas economic growth, and were proud of the flexible earning opportunities offered through our platforms.The DOL didnt respond to a request for comment.There are several possible reasons for why the DOL dropped the probe.A recent move from the DOL hints at a friendlier approach to classifying workers as contractors, with the agency announcing on May 1 that it was no longer enforcing, at least for now, a Biden-era rule which made this more difficult.Scale AI is also seeking favor with the Trump administration.
Its CEO Alexandr Wang attended Trumps inauguration (like many other tech CEOs) and has published a letter urging Trump to win the AI war.Meanwhile, Scale AIs former managing director Michael Kratsios was confirmed in March as the new director of the White Houses Office of Science and Technology Policy.The position involves advising the president on science and tech issues, and has no oversight over the DOL.
Kratsios didnt immediately respond to a request for comment.