The U.S. Department of Labor has reportedly launched a probe into Scale AI, a startup backed by Nvidia NVDA, Amazon AMZN, and Meta Platforms Inc. META, to assess its compliance with the Fair Labor Standards Act.

What Happened: The investigation into Scale AI’s adherence to fair pay practices and working conditions was launched about a year ago under the Biden administration, reported Reuters. The startup, established in 2016, has been working with the department over the past year to clarify its business model.

Scale AI, which provides a platform for AI-related information exchange and supplies large volumes of accurately labeled data crucial for training advanced tools like OpenAI’s ChatGPT, has contributors in over 9,000 cities and towns. A company spokesperson stated, “The feedback we get from contributors is overwhelmingly positive, and we have dedicated teams to ensure people are paid fairly and feel supported.”

Scale AI did not immediately respond to Benzinga’s request for comment.

The company also stated that nearly all contributor payments were timely made, with 90% of payment-related inquiries resolved within three days. Scale AI, valued at nearly $14 billion in a late-stage funding round, has a clientele that includes OpenAI and Cohere, along with Microsoft MSFT and Morgan Stanley MS.

SEE ALSO: Wage Theft Allegations Target $13.8B Tech Giant Scale AI

Why It Matters: This investigation comes on the heels of Scale AI’s recent announcement of a multimillion-dollar defense military deal. It is yet to be determined whether this crucial deal will be affected by the results of the Labor Department’s investigation.

Also, this is in sharp contrast to the recent development where Anthropic, another AI company backed by Amazon and Alphabet has made good progress and raised $3.5 billion in a Series E funding round, taking its valuation to $61.5 billion.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.