The US Labor Department is investigating Scale AI, a startup backed by Nvidia (NVDA), Amazon (AMZN), and Meta (META), over potential labor law violations, reported Reuters. The probe, which began nearly a year ago, focuses on whether Scale AI is paying its workers fairly and following federal labor rules.
Scale AI’s Role in the AI Ecosystem
Founded in 2016, Scale AI provides labeled data that powers advanced artificial intelligence (AI) models like OpenAI’s ChatGPT. With a massive $14 billion valuation, it works with major clients, including Microsoft (MSFT) and Morgan Stanley (MS). Its data helps train and improve AI systems, making them smarter and more accurate. As tech giants push to lead the AI race, Scale AI’s work plays a key role in developing smarter AI systems.
Legal Troubles Are Piling Up for This AI Stock
This isn’t the first time Scale AI has faced legal challenges. In December 2024, the company was sued by a former employee, alleging wage theft and worker misclassification. By early 2025, more lawsuits emerged, with contractors alleging mental harm from exposure to distressing content, such as material related to violence and child abuse.
Despite these allegations, the company claims that it upholds fair pay and resolves most payment issues quickly. The company reports that it ensures nearly all payments are made on time and resolves 90% of payment inquiries within three days.
The investigation could affect more than just Scale AI, as Nvidia, Amazon, and Meta rely on the startup’s data to train AI models. So, any disruption in Scale AI’s work could slow down major AI projects.
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