Washington DC Attorney General Settles with Gig Customer Service Firm for Misclassifying Workers

woman with headset at home on her couch

The Attorney General of Washington DC announced that it settled claims with a gig economy customer service company for $3 million for misclassifying workers as independent contractors.

WASHINGTON, DC – Attorney General Brian L. Schwalb today announced that Arise Virtual Solutions, Inc. (Arise), a gig economy customer service company, will pay $3 million to customer service workers and the District to resolve an employee misclassification lawsuit. In the suit, the Office of the Attorney General (OAG) alleged that Arise, which provides a workforce of at-home customer service call workers for client companies, including Comcast Cable Communications, unlawfully failed to pay workers minimum wages, overtime, and paid sick leave by misclassifying them as independent contractors rather than employees. Under the terms of the settlement agreement, Arise will pay more than $2 million to over 250 workers, and will pay nearly $940,000 to the District. Arise will also stop doing business in DC.

“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.” said Attorney General Schwalb. “The Office of the Attorney General will continue to fight to ensure that workers receive the wages and benefits they deserve and that District businesses compete on a level playing field. This case reflects our continuing commitment to holding accountable any business that tries to gain an unfair competitive advantage by skirting the District’s worker protection laws and that seeks to profit by taking advantage of hard-working District residents.”

Arise is a gig economy customer support services company. It recruits customer support workers called “agents” who work remotely from their homes, and contracts with companies seeking to cut costs by outsourcing call-center services. By every metric, these “agents” act as employees, not contractors. Before answering customer support calls and earning any money, Arise agents are required to pass client-specific certification courses that are unpaid and often weeks-long. Once agents complete a course and meet these requirements, they can answer customer service calls through Arise’s online platform. Arise closely controls and monitors its agents while they work by recording granular metrics for each agent, including “Average Handle Time” (the average length of a call) and “Average Hold” (the time a customer was put on hold), and Arise can warn or discipline agents with unsatisfactory metrics. Arise engaged at least 250 customer support agents in the District, frequently targeting its recruiting efforts towards women of color while often paying workers below the DC minimum wage.

OAG’s lawsuit alleged that Arise systematically and illegally misclassified agents as independent contractors, denying them minimum wage, overtime pay, and sick leave they are entitled to under District law. OAG further alleged that Arise failed to pay agents for all of their work, including time spent in mandatory trainings and meetings with supervisors, and made illegal deductions from their pay for background checks, mandatory certification courses, required equipment purchases, and docked pay for performance. OAG also alleged that Arise illegally foisted expenses, like the cost of equipment and internet connection, onto its agents.

Under the terms of a settlement agreement, Arise must:

  • Pay $2,060,245 to workers. Arise must pay more than 250 DC-based customer service agents the wages they are owed. A claims administrator will contact eligible workers via mail, email, and/or phone in the coming weeks.
  • Pay $939,754 to the District in civil penalties.
  • Stop doing business in DC.  

The settlement agreement is available here.

This matter was handled by Assistant Attorneys General Sarah M. Levine and Jude Nwaokobia, Senior Data Analyst Rory Pulvino, and Summer Associate Molly Keck under the supervision of Assistant Section Chief Randy Chen and Section Chief Graham Lake of the Workers’ Rights and Antifraud Section of OAG.

OAG’s Efforts to Protect Workers & Level the Playing Field for Businesses        
OAG’s Workers’ Rights and Antifraud Section is dedicated to fighting wage theft and protecting District workers. Since January 2023, OAG has secured more than $10 million for workers and the District. In total, since gaining wage theft enforcement authority, OAG has secured over $25 million by bringing investigations and lawsuits against employers who violate District law. OAG’s wage theft enforcement efforts have focused on industries with high populations of vulnerable workers, such as construction, restaurants and hospitality, healthcare, and the gig economy.

Source: Attorney General Schwalb Secures $3 Million For Workers & DC in Wage Theft Enforcement Action

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