Some contractors working for Handshake AI say they were denied payment of up to thousands of dollars each for work they did after the AI training startup accused them of violating the platform’s rules.
Dozens of other people who claim to have worked for Handshake have shared similar stories on Reddit, and the company is facing a lawsuit from two contractors over withheld wages.
San Francisco-based Handshake AI has expanded from a recruitment platform for young professionals to the data labeling industry. It’s part of a number of startups that pay hundreds of thousands of part-time contractors around the world to filter, rank, and train AI responses for the world’s largest AI company. This data work helps improve everything from laundry-folding robots to OpenAI’s ChatGPT.
Five contractors who worked on various OpenAI projects told Business Insider that Handshake suspended their accounts without warning between late December and January, and four of the contractors were not paid for their work. Employees said they learned their accounts had been suspended when they tried to log in for work.
The contractors said that when they reported the problem, the company told them they had breached the contract and terminated their contract. As a result, the company announced that its employees were not eligible for the payment.
In connection with Handshake support, identified by Business Insider, one contractor was said to be violating one or more of three platform requirements: There were “inconsistencies” in the background credentials provided. The task took 3-4 times longer to complete than the benchmark. Additionally, the task was performed from a location outside the United States, which was not permitted.
The contractor denied these violations to Handshake and Business Insider, saying it could have noticed these concerns before spending about 50 hours working on the platform. The US-based person said he received no compensation for the work, which amounted to hundreds of dollars in unpaid labor.
“This decision is final. There is no appeals process and work related to this violation will not be eligible for payment. We cannot provide further consideration of this matter,” Handshake Support wrote in an email to the contractor.
Three other contractors described nearly identical experiences. In total, these workers reported thousands of dollars in unpaid wages.
A representative for Handshake declined to comment. OpenAI did not respond to Business Insider’s request for comment.
Matt Dunn, a partner at Getman, Sweeney & Dunn, who specializes in labor law, said: Companies often include clauses in contracts that allow workers to withhold pay if they are found to be in violation of the contract.
“If they’re truly independent contractors, classified correctly, and there’s a breach of contract, the company can refuse to pay them,” Dunn told Business Insider, speaking generally about contractors. “If a worker is misclassified, nonpayment of wages violates federal and, in some cases, state law.”
AI gig economy
Handshake CEO Garrett Lord said in a July podcast appearance that Handshake contractors earn an average hourly wage of $100 to $125 or more on the platform by applying their expertise in math, coding, or law to AI training projects. Jobs are moving from generalists to specialists, he said. Freelance opportunities on the platform currently range from $75 an hour for software engineers and improv actors to $175 an hour for investment bankers and upwards of $300 for those with medical degrees or Ph.D.
The company was last valued at $3.5 billion in January 2022, before expanding into AI training. According to PitchBook, Handshake’s investors include Coatue Management, Spark Capital, Kleiner Perkins and Lightspeed Venture Partners.
This is not the first time contractors have complained about unpaid wages from Handshake.
In November, a contractor sued the startup in small claims court for $9,600 in lost revenue. In mid-January, the contractor filed a motion to dismiss the lawsuit.
In August, another contractor filed an unpaid wages lawsuit against the company. They said they withheld their pay after accusing Handshake of using AI to complete their work, even though Handshake’s policies “permit the use of ChatGPT.” Handshake’s current subscriber agreement states that the use of LLM is “strictly prohibited unless authorized in writing by Handshake.” Business Insider could not confirm whether this clause was included when the contractor started working for Handshake. The case was resolved in October, with a court ruling that the contractors should pay $6,475, the amount they had claimed they were owed.
Handshake is one of many contracting companies to capitalize on the AI boom. The demand for annotating human data has become a multibillion-dollar market as technology companies race to build language models at scale. Once primarily low-wage, generalist jobs, there is an increasing shift towards specialized skills, from legal and financial professions to STEM.
The field’s rapid growth has also come under scrutiny from outsiders. Scale AI, one of the largest companies in the data labeling industry, is facing multiple lawsuits and labor complaints from contractors who claim they were unpaid and misclassified as contractors rather than employees. The company disputes this claim.
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