Scale AI faces lawsuit from data labelers wanting FTE status

A new new labor dispute has arisen with data labeling workers challenging their classification as contractors rather than full-time employees.

Legal challenge emerges: Scale AI, a $14 billion AI data labeling company, faces a class action lawsuit from workers who claim they were misclassified as contractors and underpaid for their work training artificial intelligence models.

• The lawsuit, filed by Clarkson Law Firm in California, could potentially involve between 10,000 and 20,000 workers
• Lead plaintiff Steve McKinney alleges he was promised $25 per hour but sometimes received as little as $17 per hour
• Workers claim they were required to perform unpaid tasks and were exposed to disturbing content while labeling data

California labor law implications: The lawsuit centers on alleged violations of California’s AB5 law, which establishes strict criteria for classifying workers as independent contractors.

• The legal challenge argues Scale AI’s workers meet all three criteria under AB5 for classification as employees
• Workers reportedly operated under direct company control while performing core business functions
• Scale AI maintains significant contracts with major technology companies, making data labeling central to its business model

Industry-wide scrutiny: This lawsuit represents a broader pattern of legal challenges in the AI industry regarding labor practices.

• Scale AI has previously faced accusations of underpaying workers in the Philippines
• The Clarkson Law Firm has filed similar lawsuits against other prominent AI companies, including OpenAI and Google
• Scale AI responded by stating it does not comment on litigation but remains committed to regulatory compliance

Worker conditions and compensation: The lawsuit highlights concerning practices in the AI training workforce.

• Data labelers report being exposed to potentially traumatic content without adequate support or compensation
• Workers claim they were required to complete training and other tasks without pay
• The disparity between promised and actual wages raises questions about transparency in contractor compensation

Future implications for AI labor: This legal challenge could reshape how AI companies classify and compensate their essential data labeling workforce, potentially increasing operational costs and affecting the economics of AI development.