The U.S. Division of Labor has dropped its investigation into Scale AI’s compliance with the Truthful Labor Requirements Act (FLSA), in keeping with a supply immediately accustomed to 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 now not being investigated by the DOL, they every confirmed to TechCrunch.
Scale AI, which was valued final 12 months at $13.8 billion, is dependent upon a military of employees it categorizes as contractors to do important AI work, like labeling photographs for Huge Tech.
Nevertheless, Scale has been sued by ex-workers alleging they had been underpaid and misclassified as contractors as an alternative of workers, denying them entry to advantages like sick go away.
It’s not clear precisely why the DOL dropped the probe.
San Francisco-based Scale AI declined to remark. Up to date on Could 9, 2025 – Scale AI confirmed this information post-publication, with spokesperson Joe Osborne telling TechCrunch it’s happy with the DOL’s determination:
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“We’re happy with this replace,” Osborne stated. “Creating new types of work in AI is important to America’s financial development, and we’re pleased with the versatile incomes alternatives provided via our platforms.”
The DOL didn’t reply to a request for remark.
There are a number of potential causes for why the DOL dropped the probe.
A current transfer from the DOL hints at a friendlier strategy to classifying employees as contractors, with the company asserting on Could 1 that it was now not implementing, a minimum of for now, a Biden-era rule which made this harder.
Scale AI can be in search of favor with the Trump administration. Its CEO Alexandr Wang attended Trump’s inauguration (like many different tech CEOs) and has printed a letter urging Trump to “win the AI struggle.”
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 entails 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.
