Customer Service Company That Worked With Disney, Comcast Will Pay $2M to Workers to Settle Lawsuit Over Pay Practices

Arise Virtual Solutions, a work-at-home customer service company, will pay $2 million to workers in the District of Columbia to settle a lawsuit alleging the company failed to pay minimum wage and overtime.

The company, which did not admit wrongdoing, will pay an additional $940,000 to the District of Columbia in civil penalties and stop operating there.

The lawsuit by the D.C. attorney general was sparked by a 2020 ProPublica investigation that revealed how Arise required workers to pay for the company’s training as well as monthly fees in order to take customer service calls on its “platform.” The workers, who are mostly women and work from home, answer customer calls for major corporations such as Comcast and Disney, which contract with Arise.

The company classifies the workers as “independent contractors,” like Uber drivers. Such classification allows the company not to pay minimum wage or offer other labor protections. Customer service representatives told ProPublica, however, that the idea that they were independent was largely a fiction. Arise and the large corporations for whom they answered calls maintained a high level of control over their jobs.

“This settlement puts more than $2 million into the pockets of workers Arise took advantage of in a misclassification scheme — an illegal practice that is, unfortunately, all too common in the District,” D.C. Attorney General Brian Schwalb said.

That money will be distributed among more than 250 workers in the district. Specific payouts will depend on several factors, including how much unpaid time each person worked.

Arise, which is based in Miramar, Florida, is owned by private equity giant Warburg Pincus. In a statement, an Arise spokesperson said: “While we disagree with the office of the Attorney General’s allegations, and their efforts to deprive business owners in the District of the economic opportunities that the Arise Platform provides, we are pleased to have resolved this matter and we will continue to move our business forward outside of the District.”

The company is facing a separate lawsuit filed by the U.S. Department of Labor in federal court in Florida last year. The government accused Arise of misclassifying more than 22,000 employees as independent contractors. The Labor Department’s lawsuit, which asks the court to force Arise to pay those workers back wages and damages, “may be the largest misclassification case in its history,” an agency news release says.

A Labor Department spokesperson said the agency had no comment on the case, saying it’s still in litigation.

In its complaint, the Labor Department recounts much of the litigation history against Arise that ProPublica reported on in its initial story, noting, for example, that two separate arbitrators have found that the company treated employees as independent contractors. One agent in the Arise network who won in arbitration, Tami Pendergraft, paid about $1,500 for home office equipment, paid for a background check and training, devoted 44 unpaid days to passing a certification course, and then worked three weeks fielding telephone calls from AT&T customers. After all that, she got a single paycheck for $96.12.

Arise, in court records, denied the Labor Department’s allegation that it misclassifies workers. Referring to the agents as “service partners,” Arise says they are independent contractors who “control their service schedules and have flexibility to provide customer support services to clients whenever and wherever they want to service.”

“This independent contractor model,” Arise writes in court records, “has benefitted many groups who have been poorly served by a regimented employment model, including disabled individuals, veterans, caregivers, and others who particularly benefit from such flexibility.”

The Arise spokesperson said the company disagrees “with the Department of Labor’s efforts to take away the opportunities that the Arise Platform provides. We have and will continue working with the Department of Labor to answer questions and illustrate how we appropriately use the independent contractor relationship to protect flexibility and increase economic opportunity.”