U.S. Department of Labor drops investigation into Scale AI's Fair Labor Standards Act compliance.

U.S. Department of Labor drops investigation into Scale AI's Fair Labor Standards Act compliance.

The U.S. Department of Labor (DOL) has concluded its investigation into Scale AI's compliance with the Fair Labor Standards Act (FLSA), according to a source familiar with the matter. The investigation, which began under the Biden administration, had been examining Scale AI's adherence to fair pay practices and working conditions [1].

Scale AI, a data labeling startup valued at nearly $14 billion, relies heavily on an army of contractors for critical AI work, such as labeling images for Big Tech companies. However, the company has faced legal challenges from former workers who allege they were underpaid and misclassified as contractors, denying them access to employee benefits like sick leave [1].

The DOL's decision to drop the probe comes amidst a broader shift in the agency's approach to worker classification. Recently, the DOL announced it was no longer enforcing a Biden-era rule that made it more difficult to classify workers as contractors [1]. This move suggests a more lenient stance on contractor classification, which could benefit companies like Scale AI.

Scale AI's CEO, Alexandr Wang, has sought favor with the Trump administration. He attended Trump's inauguration and published a letter urging the former president to "win the AI war." Additionally, Scale AI's former managing director, Michael Kratsios, was confirmed as the new director of the White House's Office of Science and Technology Policy in March [1].

While the exact reasons for the DOL's decision are unclear, the agency's shift in policy and the company's connections to the Trump administration may have played a role. Scale AI has not responded to requests for comment on the matter.

References:
[1] https://techcrunch.com/2025/05/09/the-department-of-labor-just-dropped-its-investigation-into-scale-ai/
[2] https://www.reuters.com/sustainability/society-equity/us-department-labor-drops-investigation-into-scale-ai-techcrunch-reports-2025-05-09/