Scale AI relies on a very large number of remote workers it categorizes as contractors to do repetitive work with large language models like labeling images or rating LLM responses for big tech companies. But the artificial intelligence startup, most recently valued just under $14 billion, is facing a growing number of legal challenges over its ostensibly poor labor practices.
On January 3, 2025, former Scale AI worker Amber Rogowicz filed a lawsuit alleging that Scale misclassified her and other workers as contractors instead of employees. The suit claims the company's effective pay rate was approximately $15 per hour, falling below California's minimum wage requirement of $16.00 during her employment period (which has since increased to $16.50).
According to the lawsuit, Rogowicz worked for Scale's subsidiary Outlier AI from March to June of 2024. The lawsuit alleges that on an average day, the plaintiff worked around 10 hours but was only paid for five. This was partly because the time spent reviewing instructions and undergoing training was not compensated. Additionally, by challenging the classification of workers as contractors, the suit claims there were widespread violations of state laws regarding employee overtime pay, business expenses, meal breaks, and sick leave.
This is the second lawsuit within a month addressing similar concerns against Scale. On December 10, 2024, Scale was sued for alleged widespread wage theft and worker misclassification. In that case, the plaintiff sought to lead a class action lawsuit.
Rogowicz's lawsuit is not a class action but has been filed under California's Private Attorneys General Act (PAGA), which allows workers to enforce labor laws on behalf of the state. PAGA lawsuits are generally quicker and simpler to file than class actions, although 75% of any penalties must be paid to the state. While Rogowicz's suit does not include other plaintiffs, it seeks penalties on behalf of similarly situated workers who performed AI-related work for Scale.
Rogowicz's lawsuit does not seek a specific monetary amount but requests statutory penalties that could amount to thousands of dollars per worker, along with attorneys' fees.
Scale AI spokesperson Tom Channick told members of the media that the company compensated Rogowicz fairly and removed her from Outlier AI for violating unspecified community guidelines. Scale asserts that it fully complies with all laws and strives to ensure that its pay rates consistently meet or exceed local living wage standards. Additionally, Scale remarked that the lawsuit is unsurprising, noting that plaintiff lawyers often attempt to replicate earlier cases.
In response, Bay Area employment rights attorney Bryan Schwartz, who is representing Rogowicz, told members of the media that he is unaware of the specific details of Scale's allegations against her. However, Schwartz stated that it is "very common in these cases that corporations attack the messenger" when they face potential liabilities involving a large group of workers.
Schwartz expressed hope that the case would compel the company to acknowledge and correct its misclassification of workers, and to provide relief to affected employees like their client who have previously experienced wage violations.
