Scale AI, a San Francisco-based artificial intelligence company, is currently navigating a complex landscape of legal issues and regulatory changes. Under CEO Alexandr Wang’s leadership, the company has skyrocketed in value to just over $13.8 billion. Readiness to take on this monumental task of AI—being compared to the meteoric rise of ChatGPT! A series of recent lawsuits from former workers have raised serious alarms about labor practices recently. The violations consist of underpaying and miscategorizing as independent contractors.
Wang, who made headlines with his presence at Donald Trump’s inauguration, is steering the company through a critical juncture. He’s publicly called on the former president to “win the AI war.” Scale AI relies on a huge network of its own contractors. They perform essential AI work like image labeling for major tech firms. The ever-growing reliance on contractors is under fire. In addition, former employees have made claims that the loss of their classification robbed them of critical benefits such as sick leave.
Scale AI is still embroiled in continued wage lawsuits, with a second case surfacing in the last month. Simultaneously, the company is going beyond compliance while still dynamically responding to impacts of evolving labor law. On May 1, the Department of Labor (DOL) issued a game-changing announcement. They will stop enforcing a Biden-era rule that made it more complicated to classify workers as independent contractors. This reversal is a sign of a new, friendlier disposition. That’s great news for companies like Scale AI that are hell bent on keeping their contractor model.
Charles Rollet, a senior reporter at TechCrunch who has been reporting on Scale AI’s recent threads like a hawk. He pointed out that the company’s legal challenges over its labor classification and previous Baa performance could impact how the company operates in the future. Yet, due to these serious concerns, Scale AI has remained deafeningly silent on these ongoing lawsuits or its use of such dubious labor practices.
Her legal actions shine a light on the broader fight to determine how workers are classified in the gig economy. This topic is particularly salient in industries reliant on flexible labor forces. Though Scale AI is a 501(c)3 entity, its efforts to tilt the Trump administration’s favor are very much on scale. Perhaps most notable will be the impact of this strategy on DOD’s Business Operations and contractor engagement.
