Mercor, a startup that helps some big tech companies train AI models, told thousands of contract employees this week that they would no longer work on large Meta projects.
On Tuesday, those working on the project, code-named Musen, were informed that it was being closed due to “changes in the scope of the project,” according to an email reviewed by Business Insider. Shortly thereafter, the contractors were offered work on a similar new project called Nova. The hourly rate in that case was $16, which was $5 less than Musen’s hourly rate.
Founded by three Thiel fellows and recently valued at $10 billion, Mercor is part of an industry of data label companies driving the AI boom. Companies like Meta and OpenAI employ humans to tag and classify data such as text and video to improve the reliability of AI models and chatbots.
At its peak, the Musen project employed more than 5,000 people, according to two people who worked on the project. Several contractors working on the project said the news came as a surprise after they had recently been informed that the wireless project would last until the end of the year.
A Melkor spokesperson called the information “inaccurate” but declined to comment on what the company disputes. A Meta spokesperson declined to comment.
“We are transparent throughout the duration of the opportunity (role description, onboarding materials, etc.) that this is a temporary, project-based job,” the Mercor spokesperson added.
The end of the project ‘surprised everyone’
After Meta invested $14.3 billion in Scale AI and hired a CEO earlier this year, Melkor and other label companies scooped up even more business from customers who cut ties with Scale. In June, Mercor’s head of product Osvald Nitski told Business Insider that the company was working with six tech companies, dubbed the Magnificent Seven, and was picking up projects from customers leaving Scale.
Melkor also announced last month that the company manages more than 30,000 contractors and pays its human trainer employees more than $1.5 million per day.
Contractors working on the meta project performed a variety of tasks, including evaluating prompts between models and ranking which one was better. One of them told Business Insider that the Musen project has been running for several months, but was frequently paused and restarted to accommodate contractors working in different time zones.
“They kept emphasizing how happy their clients were and that it had been extended until the end of the year,” the source said. “So making this massive change before the holidays was a surprise to everyone.”
The cancellation of Project Melkor was first reported by Forbes magazine.
When they received the Nova offer, they said the work seemed similar to what they were doing at Musen. An email sent to employees said the new project would “stabilize task volumes across multimedia content” and “increase time limits and increase weekly engagement.” The paper said the new $16 rate was chosen to “provide income stability and consistent access to work, rather than fluctuating opportunities.”
One contractor who worked for Musen and then joined Nova told Business Insider that the tasks on the two projects were the same, but “it was $5 an hour cheaper.”
“Most of us seem to be in the same situation,” they added. “We wanted to boycott this, but we couldn’t afford it. We needed a guaranteed income, even if it hurt morale.”
Three Mercor employees told Business Insider that $16 is particularly low, with some contractors previously earning as much as $60 an hour on various projects for the company. Another said another previous project had been shut down and replaced with a similar project that paid $10 less per hour.
Melkor CEO Brendan Foudy said in a podcast appearance in September that the most important aspects of the business are quality and “we have incredible people that we treat incredibly well.”
He added that Melkor’s average wage is $95 an hour, while rival companies like Scale and Surge pay about $30 an hour.
Job cuts have been occurring across the data label industry in recent months. Last month, Scale AI cut its team of contractors to focus on “generalist” work. In September, Elon Musk’s AI company xAI cut more than 500 data labelers as part of a strategic shift to prioritize higher-paying professional jobs.
