AI data-labeling startup Surge AI faces unpaid wages lawsuit

The legal battle over AI data labeling signals growing scrutiny of labor practices behind artificial intelligence development. This lawsuit against Surge AI represents a critical moment in how the AI industry treats its human workforce, highlighting tensions between rapid technological advancement and fair labor practices that could reshape how AI companies structure their operations and compensate the workers training their systems.

The big picture: A class action lawsuit filed against AI data-labeling startup Surge Labs (known as Surge AI) in California alleges widespread labor violations, potentially exposing problematic workforce practices behind AI development.

• The suit, filed in San Francisco’s Superior Court by the Clarkson Law Firm, claims Surge AI violates multiple California labor laws including failure to pay minimum wage and keep proper payroll records.
• Surge AI serves as a middleman between tech giants like Meta and OpenAI and the contract workers who help refine AI tools before commercial deployment.

Key details: The lawsuit directly challenges Surge AI’s worker classification system, claiming that data-labelers are misclassified as independent contractors rather than employees.

• The complaint names Surge CEO Edwin Chen and 50 unnamed individuals as defendants.
• Founded in 2020, Surge AI has raised $25 million and employed approximately 30 people as of 2023, according to Forbes.

What they’re saying: “The AI industry is booming, and it is being built on the backs of countless human workers who train these AI models—yet multi-billion-dollar tech companies are putting the tech over their workers’ livelihoods,” stated Glenn Danas, a partner at Clarkson Law Firm.

Specific allegations: The lawsuit outlines several core labor issues that suggest data-labelers should be classified as regular employees entitled to greater protections.

• Workers reportedly undergo unpaid training and face strict time limits on compensation.
• Tasks often involve technical and complex software coding assessments without worker choice in project selection.
• The complaint alleges the company has deprived employees of millions of dollars in compensation.

Behind the numbers: Despite its comparatively modest funding, Surge AI has positioned itself as a crucial infrastructure provider in the AI ecosystem, promoting its ability to “Train AI on the richness of human data” while employing workers from major tech companies including Facebook, Microsoft, Google, and Airbnb.