Scale AI Faces Second Employee Wage Lawsuit

Scale AI Faces Legal Challenges Over Labor Practices

Scale AI, a company valued at $13.8 billion, utilizes a large workforce categorized as contractors for crucial AI-related tasks. These tasks include image labeling and evaluating responses from Large Language Models (LLMs) for major technology companies and others.

Lawsuit Alleging Worker Misclassification

On January 3, 2025, Amber Rogowicz, a former Scale AI worker, initiated legal action. The lawsuit asserts that Scale AI improperly classified her and fellow workers as independent contractors rather than employees.

The claim details that the effective hourly pay amounted to $15, which the suit argues is below California’s minimum wage of $16.00 at the time of employment (currently $16.50).

Details of the Plaintiff's Employment

According to the lawsuit, Rogowicz was employed by Scale AI’s subsidiary, Outlier, from March to June of 2024. She reportedly worked approximately 10 hours daily, but was only compensated for five.

This discrepancy, the suit alleges, stemmed from unpaid time spent reviewing instructions and completing training materials. Challenging the contractor classification also brings forth allegations of widespread violations of state laws concerning employee overtime, business expense reimbursement, meal breaks, and sick leave.

Second Lawsuit in Quick Succession

This legal challenge marks the second instance within a month where Scale AI has faced lawsuits concerning similar issues. A prior lawsuit, filed on December 10, 2024, alleged widespread wage theft and worker misclassification, as reported by SFGate.

The earlier plaintiff sought to initiate a class action lawsuit.

PAGA Claim and Potential Penalties

Rogowicz’s lawsuit, while not a class action, was filed under California’s Private Attorneys General Act (PAGA). PAGA empowers workers to enforce labor laws on behalf of the state.

PAGA suits are generally quicker and simpler to initiate than class actions, though 75% of any penalties awarded are directed to the state. The suit seeks penalties for workers in similar situations who performed AI-related work for Scale AI.

Financial Relief Sought

The lawsuit does not specify a particular monetary amount. However, it requests statutory penalties that could reach thousands of dollars per worker, in addition to covering legal fees.

Scale AI's Response

Scale AI spokesperson Tom Channick stated to TechCrunch that Rogowicz was compensated fairly and subsequently removed from Outlier due to violations of unspecified community guidelines.

Scale AI maintains full compliance with the law and asserts its commitment to ensuring pay rates meet or exceed local living wage standards. The company also suggested the lawsuit was anticipated, noting that plaintiff lawyers frequently replicate previous legal actions.

Attorney's Counter-Argument

Bryan Schwartz, a Bay Area employment rights attorney representing Rogowicz, responded to Scale AI’s claims. He indicated he was unaware of the specifics of the allegations against his client.

Schwartz noted that it is “common practice for corporations to discredit the individual bringing forth the claim” when facing potential liability involving a large number of workers.

Hopes for Resolution

“Our aim is to encourage the company to acknowledge responsibility for, and rectify, its misclassification of workers,” Schwartz stated. “We also seek to provide relief to those workers, including our client, who have experienced wage violations.”