Elon Musk’s xAI laid off at least 500 workers on its data annotation team on Friday night.
The company sent out emails notifying employees that it was planning to downsize its team of generalist AI tutors, according to multiple messages viewed by Business Insider.
“After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritization of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately,” the email read. “As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude.”
Workers were told that they would be paid through either the end of their contract or November 30, but their access to company systems would be terminated the day of the layoff notice.
The data annotation team is xAI’s largest team. The workers play a key role in developing Grok by teaching the chatbot how to understand the world by contextualizing and categorizing raw data.
The main Slack room used by data annotators had more than 1,500 members on Friday afternoon; screenshots viewed by Business Insider Friday evening showed that number down to a little over 1,000, with that number continuing to decline over the course of reporting this story.
On Friday night, xAI posted on X that it was hiring for roles and plans to grow its team of specialist AI tutors by “10X.”
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Specialist AI tutors at xAI are adding huge value. We will immediately surge our Specialist AI tutor team by 10x!
We are hiring across domains like STEM, finance, medicine, safety, and many more. Come join us to help build truth-seeking AGI!https://t.co/htpc2RijLG
— xAI (@xai) September 13, 2025
The layoff notices were sent out only a few days after several senior-level employees, including the team’s former head, recently had their Slack accounts deactivated, Business Insider reported earlier this week.
In the days that followed, workers were pulled into one-on-ones to review their responsibilities, projects, and achievements, nine workers told Business Insider. They were asked if there were any coworkers they wanted to highlight for their hard work, the workers said.
XAI told workers on Thursday night to prepare for a reorganization of the data annotation team.
In a team-wide announcement on Thursday night, the company asked some workers to drop everything and focus on a series of tests to determine their roles at the company going forward, asking staff to complete them by Friday morning West Coast time. The tests would be used to sort annotators and their supervisors based on their strengths and interests, according to a screenshot viewed by Business Insider.
The notice for tutors to prepare for testing was posted by Diego Pasini, who ten workers said recently became the team’s leader. Pasini asked workers to take at least one test by the following morning. The tests covered traditional domains like STEM, coding, finance, and medicine, as well as quirkier specialties like Grok’s “personality and model behavior” and “shitposters and doomscrollers.”
The company also listed tests for workers aiming to improve the chatbot’s safety, including by “red teaming” the bot, as well as tests dedicated to audio and video content.
Pasini joined xAI in January, according to his LinkedIn profile. He is “on leave” from his undergraduate studies at the Wharton School of Business at the University of Pennsylvania, his LinkedIn shows.
Pasini and a representative for xAI did not immediately respond to a request for comment.
The announcement said the tests were aimed at supervisors and generalist tutors. XAI divides its teams between STEM, coding, finance, legal, and media specialties, as well as a large pool of generalist tutors who are tasked with a wide range of assignments, from annotating video and audio to writing.
Two workers said the STEM and coding tests took place on CodeSignal, a skills assessment platform, while other tests were hosted on Google Forms.
More than 200 workers responded to Pasini’s message with a green check-mark emoji, and over 100 replied to the post with questions and comments, according to a screenshot viewed by Business Insider.
One worker expressed frustration with the short time span that was given for the tests, according to a screenshot viewed by Business Insider.
“Doing this after people have gone home for the day is pretty shady,” the worker wrote. The worker’s Slack account was deactivated shortly after, multiple workers said.
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