(Reuters) - The U.S. Department of Labor is investigating Scale AI, a data labeling startup backed by tech giants Nvidia (NVDA), Amazon (AMZN) and Meta (META), for its compliance with the Fair Labor Standards Act, the California-based firm said on Thursday.

The investigation is looking into Scale AI's compliance with fair pay practices and working conditions and was initiated nearly an year ago under the former President Joe Biden's administration, the company said.

The startup said over the last year it has worked with the department to explain its business model and the emerging artificial intelligence industry.

Founded in 2016, Scale AI provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT.

It also provides platform for researchers to exchange AI-related information, with contributors in more than 9,000 cities and towns.

"The feedback we get from contributors is overwhelmingly positive, and we have dedicated teams to ensure people are paid fairly and feel supported," a spokesperson said.

Nearly all contributor payments are made on time and the company resolves 90% of payment-related inquiries within three days, the company said.

The startup was valued at $14 billion in a late-stage funding round last year and counts AI firms OpenAI and Cohere, as well as Microsoft Morgan Stanley among its clients.

(Reporting by Kritika Lamba in Bengaluru; Editing by Arun Koyyur)