The U.S. Department of Labor’s investigation into Scale AI was reported closed on May 9, 2025, by TechCrunch and separately by Reuters. Scale AI said it was pleased with the update. The DOL did not publicly confirm the investigation or explain why it ended, so the closure is not a public finding that Scale AI complied with labor law.
What happened, and when
TechCrunch first reported on March 6, 2025, that the Wage and Hour Division had been investigating Scale AI since at least August 2024. The inquiry concerned possible compliance with the Fair Labor Standards Act (FLSA), including worker classification, minimum wage, overtime and recordkeeping. The report relied on a document reviewed by TechCrunch and a person familiar with the matter; the DOL declined to confirm or deny the investigation. TechCrunch’s March 6 report also said Scale AI viewed the inquiry as having begun under the Biden administration and had worked with the department to explain its business model.
On Friday, May 9, 2025, TechCrunch reported that the DOL had dropped the investigation, citing a person directly familiar with the matter. Reuters separately reported the closure, citing a person familiar with it. Scale AI said it was “pleased with the update.” The department did not issue a public explanation, consistent with its general policy of not confirming or denying individual investigations. TechCrunch’s May 9 report and Reuters’ account do not identify a settlement, payment, reclassification order or compliance agreement.
Because the event occurred in May 2025, “just dropped” is now outdated wording. The accurate description is that the federal investigation was reported closed more than a year before October 2026.
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What the investigation was examining
Scale AI, founded in 2016 and valued by Reuters at nearly $14 billion, supplies data-labeling and model-evaluation services used to train artificial-intelligence systems. Its labor network can include several different groups:
| Worker relationship | Possible role | Why status matters |
|---|---|---|
| Scale AI employees | People directly employed by the company | Generally covered by employee wage-and-hour protections |
| Workers administered through partners | People recruited or paid through services such as Upwork or HireArt | The actual contracts, control and payment arrangements determine potential responsibility |
| Platform contributors or task workers | People completing labeling, evaluation or related data tasks | Status can vary by task, location, intermediary and working relationship |
TechCrunch reported that Upwork and HireArt were no longer under DOL investigation when it published the May 9 article. That statement does not establish the status of every intermediary or every person who performed Scale-related work.
The FLSA inquiry could have involved whether workers were properly classified, paid at least the applicable minimum wage, paid overtime when required and covered by adequate time and payroll records. Potentially disputed time can include training, qualification tests, meetings, revisions, rejected work or waiting for assignments, but whether any such time is compensable depends on the facts for each worker.
Why “closed” does not mean “cleared”
An agency can end an investigation without publishing a merits decision. The available reports do not establish that investigators found no violation, that Scale AI changed its classification practices, or that the company entered a confidential resolution. They also do not show that every category of Scale-related worker was reviewed.
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- Investigation closed: The reported federal inquiry is no longer active, based on the information disclosed.
- Finding of compliance: A public conclusion that the company followed the law. No such DOL finding has been reported.
- Settlement or payment: A negotiated resolution that might include money, classification changes or other obligations. No such agreement has been identified in the available reporting.
- Court judgment: A binding decision after litigation. The closure was not a court judgment.
Scale AI has disputed worker allegations and said it complied with the law and sought to meet or exceed local living-wage standards. Those are the company’s positions, not an adjudicated conclusion.
The FLSA test behind contractor disputes
For federal wage-and-hour purposes, the central question is generally whether a worker is economically dependent on a potential employer or is genuinely operating an independent business. The DOL’s Fact Sheet 13 describes an economic-realities analysis that considers the entire relationship:
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- Opportunity for profit or loss based on managerial skill.
- Investments made by the worker and the potential employer.
- Permanence of the relationship.
- Nature and degree of control.
- Whether the work is integral to the potential employer’s business.
- The worker’s skill and initiative.
No single factor automatically decides status. A contract calling someone an independent contractor, a 1099 tax form or the worker’s consent to that label is not conclusive. Evidence about who sets rates, controls access to tasks, evaluates work, imposes performance rules, schedules activity or can deactivate an account may be relevant, along with the worker’s ability to build an independent business.
Federal and state rules are not the same
Closing a federal FLSA inquiry does not determine compliance with every state or local law. The DOL says the FLSA does not preempt stricter protections, including state regimes that use an ABC test, such as California’s. See the department’s classification FAQ.
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Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why the May 2025 timing drew attention
On May 1, 2025, the DOL instructed Wage and Hour Division investigators not to apply the 2024 independent-contractor rule while the department reviewed it. The instruction directed investigators to use longstanding principles and the economic-realities analysis in Fact Sheet 13. The department said the guidance changed enforcement-resource allocation but did not remove its authority to pursue individual cases. The release is at dol.gov/newsroom/releases/whd/whd20250501?lang=en, and the full bulletin is DOL Field Assistance Bulletin 2025-1.
The investigation’s reported closure came eight days later. That sequence is relevant context, but no public evidence establishes that the guidance caused the Scale AI matter to end. The available reporting also does not establish that political relationships or the change in administration influenced the outcome.
As of 2026, the DOL has proposed rescinding its 2024 rule and using a streamlined economic-realities analysis with control and opportunity for profit or loss as “core” factors, while also considering skill, permanence and whether the work is integrated into the business. This remains a proposal, not settled law. Details are in the February 26, 2026 release and the 2026 rulemaking page.
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A DOL decision to stop investigating does not automatically dismiss private claims. Former Scale AI workers had filed lawsuits alleging underpayment or misclassification, potentially affecting overtime, sick leave and other protections. Those allegations remain allegations unless resolved by a court or agreement. A private case can use different evidence, plaintiffs, legal theories and remedies from an agency investigation.
Potential defendants or responsible parties may differ by worker. Depending on the facts, a claim could involve Scale AI, a staffing or HR partner, a platform, or more than one entity. The answer can turn on who recruited the worker, issued payment, controlled the work, set performance standards and benefited from the services.
Records that can matter
Anyone considering a claim should preserve contracts, onboarding materials, pay statements, tax forms, task histories, time records, screenshots, deactivation notices, messages and evidence of unpaid training, meetings, revisions or waiting time. A qualified employment lawyer or labor agency can assess deadlines, arbitration clauses, collective-action options and the law in the relevant jurisdiction. News coverage alone cannot determine an individual’s legal status.
Questions the public still cannot answer
- Why precisely did the DOL close the investigation?
- Did investigators reach any confidential compliance conclusion?
- Did Scale AI alter worker classification, pay systems or recordkeeping?
- Which categories of workers and intermediaries were actually reviewed?
- Were any private lawsuits dismissed, settled or still active after May 9, 2025?
- Did the May 1 enforcement guidance, resource limits, jurisdictional issues or evidentiary concerns affect the decision?
Bottom line
The federal Scale AI labor investigation was reported closed on May 9, 2025. That removes the immediate pressure of that particular DOL inquiry, but it does not clear Scale AI, decide whether every contributor was properly classified or paid, or eliminate state-law, private-litigation or other regulatory exposure.
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