Scale AI to Settle California Worker Lawsuits Over Misclassification and Underpayment

Scale AI has agreed to settle four lawsuits filed by former workers in California who alleged they were illegally underpaid and misclassified as contractors. The lawsuits, filed between December 2024 and May 2025 in San Francisco Superior Court, accused the company of denying employees basic labor protections such as overtime pay, minimum wage, and sick leave. The plaintiffs—Steve McKinney, Amber Rogowicz, and Chloe Agape—claimed they were forced to work long hours without proper compensation, including time spent in mandatory training sessions. McKinney alleged he was monitored through invasive software that tracked his mouse movements and web browsing, calling Scale AI “the sordid underbelly propping up the generative AI industry.” Rogowicz said she earned below California’s minimum wage while working on Scale’s Outlier platform, while Agape claimed she was underpaid while working through staffing agency HireArt. All four lawsuits have now reached a settlement agreement, though the financial terms remain undisclosed. A judge will hold a hearing in December to approve the final resolution. The settlement marks a significant development for Scale AI, which has faced mounting legal scrutiny over its labor practices, particularly as it expanded rapidly in the AI training data space. The company’s recent $14.3 billion investment from Meta, which valued Scale at $29 billion and led to the departure of CEO Alexandr Wang, did not prevent these legal challenges. The lawsuits predate the Meta deal and highlight longstanding concerns about how gig-based AI data labeling work is structured. Scale AI has already taken steps to change its operations. Internal screenshots obtained by Business Insider show the company has stopped accepting gig workers who are residents of California. The company did not respond to requests for comment on this policy shift. In addition, Scale AI recently laid off a team of contractors in its Dallas office as part of a broader move to focus on more specialized AI training roles. The company continues to face legal pressure: one ongoing federal lawsuit alleges that contractors suffered severe psychological harm from exposure to violent and disturbing content while labeling data. San Francisco’s Office of Labor Standards Enforcement is also conducting an investigation into the working conditions of city residents employed by Scale AI. The probe remains active, and no conclusions have been reached. While the settlement of the California cases is a step forward, Scale AI’s legal and reputational challenges are far from over. The company’s future will likely depend on how it addresses labor standards, worker well-being, and regulatory scrutiny in its global operations.