The U.S. Division of Labor has dropped its investigation into Scale AI’s compliance with the Honest Labor Requirements Act, in line with a supply straight acquainted with the matter.
The FLSA is a federal regulation that regulates misclassification of workers as unbiased contractors and unpaid wages. TechCrunch first reported that Scale was the topic of such an investigation in March.
Upwork and Hireart, two of Scale AI’s HR companions that had been additionally being investigated for FLSA compliance per Inc. journal, are additionally not being investigated by the DOL, they every confirmed to TechCrunch.
Scale AI, which was valued final yr at $13.8 billion, relies on a military of employees it categorizes as contractors to do essential AI work, like labeling photographs for Large Tech.
Nevertheless, Scale has been sued by ex-workers alleging they had been underpaid and misclassified as contractors as a substitute of workers, denying them entry to advantages like sick depart.
It’s not clear precisely why the DOL dropped the probe. San Francisco-based Scale AI declined to remark, whereas the DOL didn’t reply to a request for remark.
There’s a number of potential causes, although.
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A latest transfer from the DOL hints at a friendlier method to classifying employees as contractors, with the company saying on Might 1 that it was not imposing, at the least for now, a Biden-era rule which made this harder.
Scale AI can also be searching for favor with the Trump administration. Its CEO Alexandr Wang attended Trump’s inauguration (like many different tech CEOs) and has revealed a letter urging Trump to “win the AI battle.”
In the meantime, Scale AI’s former managing director Michael Kratsios was confirmed in March as the brand new director of the White Home’s Workplace of Science and Know-how Coverage.
The place includes advising the President on science and tech points, and has no oversight over the DOL. Kratsios didn’t instantly reply to a request for remark.
