Mercor Contractors Claim AI Firm Cut Their Salaries

Mercor Contractors have raised concerns after significant changes were made to their employment terms following a recent funding round. The San Francisco-based AI startup achieved a valuation of $10 billion last month after securing $350 million in funding, making its three co-founders some of the youngest self-made billionaires in the world.

Job Cuts and Pay Reductions at Mercor

Just days after the funding announcement, Mercor reportedly terminated one of its AI projects, which led to an abrupt pay cut for many contractors. According to individuals involved, days later, workers were notified via email that the project, known as Musen, had been canceled.

The contractors had been engaged in reviewing audio and video content from Meta’s platforms, including Facebook and Instagram Reels. This project initially involved over 5,000 contractors, some of whom had been working diligently for months. However, they were recently informed of the project’s termination without prior notice.

Contractors’ Reactions and New Terms

Feedback from affected contractors has been overwhelmingly negative. Many expressed shock at the suddenness of the project shutdown and the ensuing salary reductions. Previously, these workers were compensated at a rate of $21 per hour.

• The new offer presented by Mercor was $16 per hour, a rate that falls below the minimum wage in several states including California and Washington.
• Workers stated that earlier in the month, there had been assurances that the project would continue until at least December.
• Contractors voiced feelings of disrespect, highlighting that their contributions to AI development deserved recognition and fair compensation.

One contractor shared, “It feels very unfair to ask us to do more work for less pay.” A subsequent email from Mercor promised more stable and predictable work conditions in a new project dubbed Nova, which they claimed would offer steadier task volumes.

Background on Mercor and Recent Developments

Founded by high school friends Brendan Foody, Adarsh Hiremath, and Surya Midha, Mercor began as an AI recruiting platform and later pivoted to data labeling for AI. The startup saw a remarkable revenue surge, attributed to the increasing demand for data labeling in the tech industry.

Mercor recently announced achieving a $500 million annual revenue run rate as they made a debut on the Forbes Cloud 100 list. However, tensions within the industry are evident, as competitors like Scale have initiated legal actions against Mercor, alleging theft of trade secrets.

While many contractors have opted to continue working under the new terms, the situation has raised questions about the treatment of gig workers in the rapidly evolving tech landscape. Mercor’s pivot to offering lower wages, amid significant funding and expansion, underscores the challenges that gig workers face in an environment increasingly dependent on flexible labor.