Scale AI quietly agreed to settle multiple lawsuits from its California contractors

Scale AI has reached an agreement to settle four lawsuits filed by former contractors in California, who alleged they were unlawfully underpaid and misclassified as independent workers. This decision, documented in court filings this week, comes as the San Francisco-based company relies heavily on a large workforce it designates as contractors to assist in training AI models. The lawsuits, which were initiated prior to Scale AI's significant acquisition by Meta for $14.3 billion this summer, highlight claims from former employees regarding their treatment and compensation. The exact terms of the settlement have not been disclosed, pending judicial approval. However, the resolution of these cases signals progress for Scale AI, which has been entangled in litigation concerning its business practices. Among the plaintiffs are individuals like Steve McKinney, Amber Rogowicz, and Chloe Agape, who accused Scale AI of not only misclassifying them as contractors but also of underpayment and withholding benefits such as overtime and sick leave that would typically be afforded to full-time employees. McKinney's class-action complaint outlined that he was unpaid for extensive training sessions and criticized the company's monitoring practices, describing them as "Orwellian". Rogowicz alleged that her earnings fell below California's minimum wage while working on Scale AI’s primary gig platform, Outlier. Agape, who lodged two lawsuits, claimed she faced similar underpayment issues while being hired through the staffing agency HireArt. As these four lawsuits have now moved towards settlement, a court hearing is scheduled for December. Despite this development, Scale AI still faces challenges, including an ongoing federal lawsuit regarding psychological distress experienced by workers exposed to graphic content during data labeling tasks. Additionally, San Francisco's labor regulators are investigating the working conditions for residents employed by the company, with no conclusion reached yet. In light of the lawsuits, Scale AI has reportedly ceased onboarding gig workers from California. The company also recently laid off a team of contractors in Dallas as part of a strategic shift towards more specialized AI training. Requests for comment from Scale AI and HireArt regarding these developments have gone unanswered.