Cristin Monnich
By Cristin Monnich, Head of Global Compliance Strategy & GM of AOR at Worksuite
When it comes to freelancer classification, there are signals — and then there are sirens. The lawsuits against Surge AI and Scale AI should sound like the latter.
In both cases, contract workers allege they were misclassified and denied basic legal protections — with serious ethical and regulatory implications. This isn’t a story about job titles; it’s how companies structure relationships with independent contractors — and whether those structures are defensible under evolving labor laws.
If you’re building a flexible workforce, these cases offer a critical lesson: compliance can’t be an afterthought. It needs to be embedded in how you onboard, classify, and support every worker — from day one.
Two Startups, Two Serious Missteps
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Surge AI: Control Without Classification
As reported by Bloomberg Law, a former data labeler is suing Surge AI for misclassification. The worker alleges they were directed on hours, tools, and methods of work — yet treated as an independent contractor. This reflects a common pattern: operating like an employer, while classifying someone as a freelancer.
Under the U.S. Department of Labor’s 2024 rule, this is a red flag. Worker classification depends on how the relationship functions in practice — not what the paperwork says.
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Scale AI: Exploitation at Scale
In a second case, Inc. reports that Scale AI is being sued for allegedly subjecting Kenyan contract workers to traumatic, violent content — without any mental health support or legal protections afforded to employees. Workers were reportedly paid as little as $2/hour to review disturbing material, without proper safeguards or care.
This isn’t just a classification issue. It’s a breakdown in duty of care — amplified by global reach, platform scale, and a lack of operational safeguards.
The Common Thread: Innovation Without Infrastructure
These lawsuits illustrate a broader trend: AI startups building contractor-heavy labor models without contractor-ready systems.
In the rush to scale, some companies treat compliance as optional — something to address “later.” But regulators are catching up. And the consequences are no longer theoretical.
Labor watchdogs, class action firms, and international courts are increasingly focused on how companies define, document, and support their freelance talent. Compliance isn’t just a cost of doing business — it’s a brand issue, a financial liability, and a long-term operational risk.
Why This Matters Now: Enforcement Meets Ethics
These aren’t isolated incidents. They’re part of a global shift.
Across the U.S., EU, LATAM, and APAC, new labor laws are tightening definitions, raising documentation standards, and elevating the importance of ethical worker treatment.
If your company is scaling a contractor program — and still using spreadsheets, email templates, or one-size-fits-all onboarding — now is the time to step back and ask:
Are we building something sustainable?
Because if contractors are being managed like employees, classified as freelancers, and onboarded manually, you're not just out of compliance — you're out of alignment with the direction labor regulation is heading.
How Worksuite Helps You Avoid These Pitfalls
At Worksuite, we’ve helped hundreds of companies proactively protect themselves — and their workers — by building classification and compliance directly into their systems.
✔️ Classification Checks, Built In: Our workflows include location-specific classification logic — with audit trails and defensible records to support every engagement.
✔️ Structured Onboarding: From W-9/W-8BEN collection to contract execution, our platform enforces a repeatable, compliant process so no freelancer begins work without proper documentation.
✔️ Contracts Management: Centralize Worksuite’s Contract Module is a centralized hub for storing and tracking freelance contracts, managing projects and payments against agreed terms or SOWs, and delivering valuable insights through project analytics.
✔️ Centralized Visibility: You can see exactly who is onboarded, who’s missing documentation, and which freelancers are classified correctly — all in one dashboard.
Real-World Example: Classification Done Right
One of our clients — a global entertainment brand — was onboarding hundreds of freelancers across editorial, design, and tech teams. Initially, they relied on disconnected spreadsheets, informal approvals, and inconsistent contracts.
After implementing Worksuite:
- Classification workflows were embedded into onboarding
- Contractor documents and statuses were centralized
- Time to onboard Freelance workers was reduced by 80%, freeing up valuable bandwidth for their team.
- The company avoided potential misclassification audits focused on their industry
Learn more: Contractor or Employee? The Risks of Misclassification
Final Takeaway
The lawsuits against Surge AI and Scale AI reinforce something we’ve told clients for years: classification isn’t just a checkbox — it’s a strategic framework.
If your contractors look like employees in how they’re managed, scheduled, or embedded in your workflows — regulators will treat them like employees in court.
The companies that win won’t just have the best products or fastest roadmaps. They’ll be the ones that invest in infrastructure — scalable, ethical, compliant infrastructure — from day one.
Want to build a compliant and scalable freelance program?
Contact Worksuite to learn how our platform embeds classification and compliance into every step of your freelancer workflows. Protect your company and your talent today.
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Cristin Monnich is Head of Global Compliance Strategy at Worksuite, where she leads strategic initiatives across legal classification, onboarding compliance, and international labor frameworks. Cristin works directly with enterprise clients scaling global contractor programs and writes for legal, HR, and procurement teams who want to move fast — without missing red flags.
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