Scale AI employs a significant number of workers, categorised as contractors, to perform critical AI tasks such as image labelling and evaluating LLM responses for major technology firms and others. However, the AI startup, recently valued at $13.8 billion, is encountering increasing legal challenges concerning its workforce practices.
On January 3, 2025, former Scale AI employee Amber Rogowicz initiated a lawsuit, claiming that Scale misclassified her and fellow workers as contractors rather than employees. The lawsuit alleges that the company’s compensation equates to approximately $15 per hour, which reportedly breaches California’s minimum wage requirement of $16.00 at the time she worked (currently $16.50).
Rogowicz was employed through Scale’s subsidiary Outlier from March to June 2024, as stated in the lawsuit. She reports working roughly 10 hours each day, yet was compensated for only five, with part of this discrepancy attributed to unpaid training and instruction time, according to the claims. The lawsuit challenges the contractor classification and also cites numerous violations of state regulations pertaining to employee overtime compensation, work-related expenses, meal breaks, and sick leave.
This marks the second occasion in under a month that Scale has been embroiled in legal issues regarding similar allegations. On December 10, 2024, another lawsuit was filed against Scale, alleging extensive wage theft and worker misclassification, as reported by SFGate. This prior lawsuit sought to designate the plaintiff as the lead in a class action suit.
Rogowicz’s lawsuit, unlike the previous case, is not aimed at class action status but is filed under California’s Private Attorneys General Act (PAGA), which allows workers to enforce state labour laws. PAGA lawsuits are generally quicker and less complicated to submit than class actions, though 75% of any penalties awarded must be allocated to the state. While no other plaintiffs are named in Rogowicz’s case, it seeks penalties on behalf of other workers who have engaged in AI tasks for Scale.
Rogowicz’s lawsuit does not specify a particular monetary figure but seeks statutory penalties that could amount to thousands of pounds for each worker involved, in addition to legal fees.
A Scale spokesperson, Tom Channick, informed StartupSuperb that Rogowicz was compensated appropriately and was removed from Outlier for breaching unspecified community guidelines. Scale contends that it fully adheres to legal requirements and strives to ensure that its pay rates meet or exceed local living wage benchmarks. The company further indicated that such lawsuits are expected, as legal representatives frequently pursue claims mirroring previous cases.
In response, attorney Bryan Schwartz, representing Rogowicz, communicated to StartupSuperb that he is unaware of the specific details surrounding Scale’s allegations against Rogowicz. Schwartz remarked that it is “common for corporations to attack the whistleblower” in situations involving significant liability regarding a large number of workers.
“We hope our case will compel the company to acknowledge and correct its misclassification of workers and to provide recompense to affected individuals like our client who have experienced wage violations in the past,” Schwartz stated.