Some contractors who worked on OpenAI projects say Handshake AI is withholding thousands of dollars in pay

Several contractors engaged with Handshake AI, a data-labeling startup, are claiming they have been denied payment amounting to thousands of dollars for their completed work. These accusations stem from claims made by the company that the contractors violated platform rules. A growing number of individuals who have collaborated with Handshake have echoed these grievances on social media platforms like Reddit, while the company faces legal challenges from at least two contractors regarding unpaid wages. Based in San Francisco, Handshake AI shifted from a platform targeting young professionals to one focused on the data-labeling sector. This transition is part of a broader trend among startups that employ part-time contractors globally to filter, rank, and train AI systems for major companies. Their contributions are essential for enhancing technologies, from household gadgets to advanced AI like OpenAI's ChatGPT. Five contractors who contributed to various projects for OpenAI reported that their Handshake accounts were unexpectedly suspended between late December and January. Four of these individuals have stated they did not receive any compensation for their work. Upon attempting to log in, they discovered their accounts had been disabled. The contractors say that when they inquired about the suspensions, Handshake attributed the issues to contract violations, which led to a denial of payment. In a communication with Handshake support, one contractor was informed that they had breached one or more platform requirements. Allegations included inconsistencies in the provided background information, excessive time taken to complete tasks, and performing tasks from a location outside the U.S. The contractor contested these claims, arguing that any potential issues should have been addressed before they invested approximately 50 hours of work, resulting in unpaid labor worth hundreds of dollars. Handshake's support team communicated that the decision to withhold payment was final, with no option for appeal. The experiences of the other contractors were reported to be nearly identical, leading to a total of thousands of dollars in unpaid wages among them. Handshake has not provided any comments on the situation, and OpenAI has also remained silent on inquiries regarding the matter. Labor law expert Matt Dunn noted that companies may include clauses in contracts allowing them to withhold payment if a contractor is deemed to have violated contractual terms. He emphasized that if the contractors were misclassified, withholding pay could constitute a breach of federal or state laws. Handshake's CEO, Garrett Lord, previously mentioned in a podcast that contractors on the Handshake platform typically earn between $100 to $125 per hour for their expertise in AI training. The company has seen its valuation peak at $3.5 billion in January 2022, following its expansion into AI. This is not the first instance of contractors raising concerns about unpaid wages from Handshake. In previous months, a contractor pursued legal action for $9,600 in lost earnings but later dismissed the case. Another contractor filed a lawsuit alleging unpaid wages after being accused of using AI tools for their tasks, despite the company’s policy allowing such practices. This case was ruled in favor of the contractor, who was awarded $6,475. As the demand for data annotation in AI surges, companies like Handshake are at the forefront of a rapidly evolving market. However, this growth has also attracted scrutiny regarding labor practices, with other firms in the industry facing similar allegations of unpaid wages and contractor misclassification.