Surge AI is latest San Francisco startup accused of misclassifying its workers

Artificial intelligence training company Surge AI has been hit with a lawsuit alleging it has misclassified contractors hired to improve chat responses from AI software for some of the world’s leading tech companies.

The proposed class action lawsuit alleges that “data annotators” — hired by Surge AI to ensure that powerful AI systems run by Meta and OpenAI can properly generate text responses that are accurate and capable of mimicking human expressions — were “deliberately” classified as independent contractors, denying them benefits given to employees.

In the lawsuit filed Monday, California-based plaintiff Dominique DonJuan Cavalier II, represented by public interest law firm Clarkson, alleged he and other data annotators were made to do unpaid training and were subject to near-impossible time limits for tasks that caused their pay to be docked.

San Francisco-based Surge AI, also known as Surge Labs, and its subsidiaries “have reaped enormous profits by deliberately avoiding paying wages and benefits to those performing work that forms the backbone of Defendants’ business,” the lawsuit alleges.

Surge AI did not respond to a request for comment.

In recent years, AI data training companies have been accused of mistreating workers abroad in Kenya and elsewhere. But increasingly, as the AI industry balloons, workers in California and nationwide have begun to raise similar complaints.

Similar lawsuits have been filed against Scale AI, a larger AI training company that has gathered a vast workforce of contractors to train AI tools for companies, including Open AI and Google, as well as the U.S. Department of Defense.

Surge AI has raised some 25 million, according to Crunchbase.

The much larger Scale AI is seeking a valuation as high as $25 billion in a potential tender offer, Reuters reported.

Plaintiff Steve McKinney, a resident of Newbury Park who was hired by Scale AI’s subsidiary Outlier AI as a “tasker,” sued the company in December alleging he was promised a pay rate of $25 per hour but was ultimately paid only a fraction of that amount.

Workers who questioned the company’s payment practices in internal messaging app Slack were abruptly removed from the app, according to the suit, which was also brought by law firm Clarkson, headquartered in Malibu.

Scale AI contractors in January hit the company with a second lawsuit, alleging contractors were made to sift through graphic “depraved images” and emotionally distressing content, and dealt with post-traumatic stress disorder and other psychological issues as a result.

Scale AI did not immediately respond to a request for comment. A company spokesperson told TechCrunch in March that its work was misunderstood by regulators and others and that the company offers “flexible work opportunities” to Americans.