The Department of Labor just dropped its investigation into Scale AI

The U.S. Department of Labor has dropped its probe into Scale AI’s compliance with the Fair Labor Standards Act, according to a root straight acquainted with the matter. 

The FLSA is simply a national instrumentality that regulates misclassification of employees arsenic autarkic contractors and unpaid wages. TechCrunch archetypal reported that Scale was the taxable of specified an investigation successful March. 

Upwork and Hireart, 2 of Scale AI’s HR partners that were besides being investigated for FLSA compliance per Inc. magazine, are besides nary longer being investigated by the DOL, they each confirmed to TechCrunch.

Scale AI, which was valued past twelvemonth astatine $13.8 billion, depends connected an service of workers it categorizes arsenic contractors to bash captious AI work, similar labeling images for Big Tech. 

However, Scale has been sued by ex-workers alleging they were underpaid and misclassified arsenic contractors alternatively of employees, denying them entree to benefits similar sick leave.

It’s not wide precisely wherefore the DOL dropped the probe. San Francisco-based Scale AI declined to comment, portion the DOL didn’t respond to a petition for comment. 

There’s respective imaginable reasons, though. 

A caller determination from the DOL hints astatine a friendlier attack to classifying workers arsenic contractors, with the bureau announcing connected May 1 that it was nary longer enforcing, astatine slightest for now, a Biden-era regularisation which made this much difficult.

Scale AI is besides seeking favour with the Trump administration. Its CEO Alexandr Wang attended Trump’s inauguration (like galore different tech CEOs) and has published a missive urging Trump to “win the AI war.” 

Meanwhile, Scale AI’s erstwhile managing manager Michael Kratsios was confirmed successful March arsenic the caller manager of the White House’s Office of Science and Technology Policy.

The presumption involves advising the President connected subject and tech issues, and has nary oversight implicit the DOL. Kratsios didn’t instantly respond to a petition for comment.