Scale AI, a San Francisco-based artificial intelligence startup with a $13.8 billion valuation and high-profile partnerships across the tech industry, is facing a class-action lawsuit alleging wage theft and worker misclassification.

The lawsuit, filed Tuesday in San Francisco Superior Court by former contractor Steve McKinney, names Scale AI and its top executives, including 27-year-old billionaire CEO Alexandr Wang, as defendants.

McKinney alleges Scale built its success by exploiting workers, accusing the company of practices like unpaid labor, denied overtime and unfair reassignments. As such, the lawsuit seeks class-action certification, restitution, punitive damages and changes to Scale's worker classification model, according to SFGate, which reported this on Friday.

"Scale AI is the sordid underbelly propping up the generative AI industry," the complaint states, describing the company's control over contractors as "Orwellian." It accuses Scale of monitoring contractors with tools that take periodic screenshots of their computer use, docking pay for tasks that exceed estimated time limits and reassigning workers to lower-paying projects.

The lawsuit also claims Scale violated California's "ABC" test for independent contractors, asserting that workers like McKinney should be classified as employees.

Scale spokesperson Tom Channick responded to the allegations. "We do not comment on litigation but are committed to ensuring we are in full compliance with all applicable laws and regulations," he told SFGate in a statement, adding that contractors working for Scale enjoy flexible, supplemental income and earn significant sums.

Dark Side Of AI’s Rapid Growth

The lawsuit underscores the darker side of the AI industry's rapid growth, noting the disturbing and at times traumatic tasks contractors are sometimes assigned. McKinney's complaint alleges, for example, that workers are assigned to projects "that deal with obscene and distressing subject matter, where Taskers must provide responses to prompts regarding extremely disturbing topics." The document provides the example of "sexual intercourse with dead animals."

Channick countered the claims, stating that workers receive advanced notice about sensitive tasks, can opt out at any time and have access to wellness programs. However, McKinney's attorney, Glenn Danas, said in a news release quoted by SFGate that such tasks are traumatizing for workers. "If companies like Scale AI are not held accountable, humans will continue to be exploited to train this unregulated technology for profit," Danas said.

Scale’s Meteoric Rise

Scale AI, founded in 2016, positioned itself as a frontrunner in the AI industry, years before OpenAI's ChatGPT gained popularity. According to Fortune, Scale contractors annotated images for Cruise and Waymo, aiding autonomous vehicle tech and supplied data for OpenAI. With a $13.8 billion valuation, Scale partners with Meta Platforms, Microsoft, Nvidia and the Department of Defense.

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