California, October 18, 2025
News Summary
Scale AI has reached a settlement regarding four lawsuits filed by former California contractors over illegal underpayment and misclassification as independent contractors. The lawsuits accused the company of violating state minimum wage laws and denying essential benefits. These legal issues arise amid a significant investment from Meta, which now holds a 49% stake in Scale AI. The settlement is pending judicial approval, with further investigations into contractor conditions still ongoing.
California – Scale AI has reached a settlement regarding four lawsuits filed by former contractors in California, addressing issues of illegal underpayment and misclassification as independent contractors. The company, headquartered in San Francisco, often employs contract workers to assist in training artificial intelligence models. The settlement emerges following a significant investment in the company by Meta, which acquired a 49% stake for $14.3 billion. This acquisition has resulted in former Scale AI CEO, Alexandr Wang, transitioning to a leadership role at Meta, focusing on its superintelligence team.
The lawsuits, which date back to between December 2024 and May 2025, were filed in San Francisco Superior Court. Plaintiffs such as Steve McKinney, Amber Rogowicz, and Chloe Agape accused Scale AI of misclassifying their employment status and compensating them below the state’s minimum wage. They also claimed to have been denied essential benefits such as overtime pay and sick leave.
In McKinney’s class-action complaint, he stated he was not compensated for extensive training webinars, adding that he was subjected to monitoring through intrusive software. Rogowicz alleged that her earnings on the company’s gig work platform, Outlier, fell short of California’s minimum wage standards. Similarly, Agape claimed that she was underpaid during her employment through the staffing agency HireArt.
Though specific terms of the settlement are not public, the agreement is pending judicial approval, with a court hearing scheduled in December 2025. Meanwhile, Scale AI continues to face scrutiny: an ongoing federal lawsuit in California addresses severe psychological distress experienced by contractors who were exposed to violent content during their data labeling tasks. Furthermore, the San Francisco Office of Labor Standards Enforcement is investigating Scale AI in relation to working conditions for local residents.
In response to these lawsuits and ongoing investigations, Scale AI has reportedly halted the hiring of gig workers who are California residents. This strategic shift reflects a broader move within the company following internal communications recently examined by sources. Additionally, Scale AI has laid off a group of contractors in its Dallas office, indicating a transition towards a more specialized approach to AI training.
Key Details of the Settlement
- Settled four lawsuits regarding illegal underpayment and misclassification.
- Accusations include failure to pay minimum wage and denying benefits.
- Settlement pending judicial approval, with a court hearing expected in December 2025.
- Scale AI faces ongoing investigations and a separate federal lawsuit related to contractor conditions.
- Company shifts hiring practices and employees amid these legal challenges.
Background Context
Scale AI is a crucial player in the AI field, supplying data services through its workforce of contract workers that help train AI models. The company’s recent partnership with Meta marked a significant financial milestone and leadership change. This collaboration stands independent of the ongoing legal challenges that Scale AI currently faces.
Scale AI’s Current Challenges
In addition to these lawsuits, the company’s business model has come under scrutiny, resulting in a reevaluation of how it engages with contract workers. The lawsuits, including claims from various former employees regarding treatment and payment, highlight critical labor issues within the fast-growing tech industry.
Conclusion
The resolution of these lawsuits may provide some closure for the plaintiffs involved, but ongoing investigations and the separate federal lawsuit indicate that challenges remain for Scale AI as it navigates its future in a rapidly changing industry.
FAQ
What was the nature of the lawsuits filed against Scale AI?
The lawsuits were filed concerning illegal underpayment and misclassification as independent contractors.
Who are the plaintiffs involved in the lawsuits?
The plaintiffs include former Scale AI workers Steve McKinney, Amber Rogowicz, and Chloe Agape.
What are the key allegations in the lawsuits?
The allegations include misclassification, failure to pay minimum wage, and denial of benefits such as overtime and sick pay.
When were the lawsuits filed?
The lawsuits were filed between December 2024 and May 2025.
What is the next step regarding the settlement?
A judge is scheduled to hold a hearing on the settlement in December 2025.
What other legal challenges does Scale AI face?
Scale AI still faces one ongoing federal lawsuit related to severe psychological harm inflicted on contractors exposed to violent content.
What changes has Scale AI made in its hiring practices?
Scale AI has ceased hiring gig workers who are California residents, as noted in internal communications.
Key Features Overview
| Feature | Details |
|---|---|
| Nature of Lawsuits | Illegal underpayment and misclassification |
| Plaintiffs | Steve McKinney, Amber Rogowicz, Chloe Agape |
| Accusations | Below minimum wage, denial of benefits |
| Time Frame of Lawsuits | December 2024 – May 2025 |
| Court Hearing | Scheduled for December 2025 |
| Ongoing Challenges | Federal lawsuit on psychological harm |
| Hiring Practices Change | Ceased hiring California gig workers |
Deeper Dive: News & Info About This Topic
- Business Insider: Scale AI Settles Worker Lawsuits
- TechCrunch: Scale AI Lawsuit Against Mercor
- Inc: Scale AI Accuses Mercor
- Wikipedia: Scale AI
- Google Search: Scale AI lawsuits
Author: Anaheim Staff Writer
The Anaheim Staff Writer represents the experienced team at HEREAnaheim.com, your go-to source for actionable local news and information in Anaheim, Orange County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as major conventions at the Anaheim Convention Center, including NAMM and VidCon, exciting games at Angel Stadium and Honda Center, and developments at Disneyland Resort Our coverage extends to key organizations like the Anaheim Chamber of Commerce and Visit Anaheim, plus leading businesses in hospitality, entertainment, and innovation that power the local economy As part of the broader HERE network, including HERECostaMesa.com, HEREHuntingtonBeach.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.
