Has Mercor faced any regulatory issues or lawsuits from users?
Executive summary
Yes — public reporting shows Mercor has been the target of multiple legal actions and public complaints: a high‑profile federal trade‑secrets suit filed by rival Scale AI, at least one employment class action alleging misclassification and labor‑law violations, and widespread contractor backlash over pay changes reported in the press [1] [2] [3] [4]. The record in the provided sources shows allegations and filings, not final adjudications or regulatory enforcement actions, and Mercor has disputed some reporting [5].
1. The headline lawsuit: Scale AI’s trade‑secret complaint
In September 2025 Scale AI filed a federal lawsuit accusing Mercor and a former Scale employee, Eugene Ling, of misappropriating trade secrets and attempting to steal major customers, with complaints lodged in the Northern District of California and reported across TechCrunch, Law360, Axios and court dockets [1] [2] [6] [7]. The filings allege Ling downloaded confidential Scale documents after meeting Mercor’s CEO and that those materials formed a “roadmap” for unfair competition; media coverage says Scale sought damages and injunctive relief including access to files and restrictions on Ling’s work with a named customer [8] [9] [5]. Mercor’s founders have publicly pushed back — co‑founder Surya Midha asserted the company “has no interest in any of Scale’s trade secrets” and said the documents were on Ling’s personal drive, which Mercor stated it has not accessed while investigating [5]. The sources document the filing and responses but do not report a court decision at the time of reporting [2] [7].
2. Labor and contractor disputes: class action and pay complaints
Separate from the corporate espionage fight, Mercor has been named in worker‑side legal actions and media exposés. A class action filed in California Superior Court alleges Mercor.io (alongside OpenAI) misclassified AI trainers as independent contractors, failed to pay overtime, violated meal‑break and expense‑reimbursement rules, and used intrusive monitoring software — the complaint seeks statutory penalties and is identified as Cox v. Mercor Io Corporation in Santa Barbara County filings [3]. Additionally, reporting in People (citing Forbes and Business Insider) details contractor outrage after Mercor allegedly shut down a large project and offered rehiring at lower rates, triggering a public backlash and company denials of the accuracy of some claims [4]. Those sources document allegations and public reaction; they do not show final adjudication or regulatory penalties in the materials provided [3] [4].
3. Context, motives and the surveillance of narratives
The legal actions sit inside a broader clash between an incumbent data‑labeling giant and a fast‑scaling startup backed by high‑profile investors; outlets note the litigation may reflect both substantive legal claims and competitive strategy to contain a perceived rival [9] [10]. Coverage from industry and financial sites emphasizes Mercor’s rapid valuation growth and investor enthusiasm even as the company faces lawsuits, suggesting incentives for both aggressive defense by Mercor and vigorous enforcement or deterrence by competitors like Scale [10] [11]. Reporters and corporate spokespeople have competing agendas: Scale frames the suit as protecting intellectual property and customers, while Mercor frames hiring from Scale as normal industry movement and denies using stolen material [5].
4. What the reporting does — and does not — prove
The sourced reporting proves there are multiple allegations and active lawsuits involving Mercor: a federal trade‑secret suit by Scale and at least one labor‑focused class action and contractor complaints [1] [2] [3] [4]. The sources do not provide outcomes, regulatory enforcement actions, or definitive findings of wrongdoing; they report filings, company statements, and media investigations rather than court verdicts or agency rulings [2] [7]. Therefore, while Mercor has clearly faced lawsuits and public controversies, the factual record supplied here stops short of adjudicating liability or regulatory guilt [3] [5].
5. Bottom line and practical implications
For stakeholders — customers, contractors, and investors — the immediate reality is risk: litigation over trade secrets and labor practices can disrupt contracts and reputation even absent judgments, and observers warn such disputes can influence due diligence and contracting in the AI data ecosystem [11] [9]. Readers should treat the filings as serious allegations requiring follow‑up on docket outcomes and any regulatory investigations, and note Mercor’s public denials and the likely competitive motives on all sides as reported [5] [10].