WASHINGTON, D.C. – Attorney General Karl A. Racine today announced a wage theft lawsuit against Arise Virtual Solutions, Inc. and Comcast Cable Communications Management, LLC. Arise is a customer service support company that contracts with companies like Comcast to outsource their customer service needs. The lawsuit alleges that Arise and Comcast denied customer service agents minimum wage, overtime, and paid sick leave by misclassifying them as independent contractors rather than employees. Arise targets women of color in their marketing for service agents and then denies those workers the pay and benefits required by District law. Arise’s scheme has injured at least 180 workers in the District. OAG’s investigation into other companies engaged in similar unlawful schemes with Arise continues.
“Arise has been elaborately constructed to avoid paying workers the minimum wage, overtime, and paid sick leave as required by District law. Arise may get away with its scheme elsewhere, but it will not escape liability here. Our office has, and will continue, to stand up for workers,” said AG Racine. “Comcast, and other large companies, partnered with Arise and profited from that company’s theft of workers’ wages and benefits. Under District law, Comcast is liable for Arise's illegal practices. Gig economy companies must abide by the same laws as brick-and-mortar businesses, and my office will hold companies accountable if they shortchange workers.”
Worker misclassification is a type of payroll fraud where an employer deprives employees minimum wage, overtime, and paid sick leave by classifying them as “independent contractors,” who are generally not entitled to the same protections. In the District, employees are protected by the Minimum Wage Revision Act (MWRA), which requires employers to pay a minimum wage that is presently $15.20/hour and overtime rates when employees work over 40 hours per week. Employees are also protected by the Sick and Safe Leave Act (SSLA), which requires employers to provide employees with paid sick leave. The District’s workers’ rights laws are among the strongest in the country—its minimum wage is higher than any other state. Companies that misclassify workers flout these protections. A 2019 report issued by AG Racine demonstrated how worker misclassification unlawfully reduces an employer’s labor costs at the expense of their workers’ wages. Numerous studies have documented that worker misclassification schemes are pervasive in the gig economy.
Arise is a customer support services company that operates in the gig economy and employs a workforce of customer support agents, many of whom work remotely from their homes. Arise contracts with clients like Comcast that are looking to cut costs by outsourcing call-center services. Arise maintains an online platform that allows Comcast’s customer service calls to be routed to an Arise agent to resolve the issue. Arise has employed at least 180 customer support agents from the District and frequently targets its recruiting efforts at women of color.
The lawsuit alleges that Arise has systemically misclassified its agents as independent contractors, denying them their rights to minimum wage, overtime, and paid sick leave. These agents are legally employees because Arise has the power to hire and fire them, determines their rate of pay, requires agents to meet with supervisors and managers, and controls agents with a digital surveillance apparatus that tracks their performance down to the precise second. Moreover, Arise’s agents do the work at the very heart of the company’s business—Arise could not operate its customer support business without its customer support agents. In addition, the lawsuit seeks to hold Comcast liable for these wage violations as a joint employer who also exercised substantial control over Arise agents’ conditions of work.
Arise uses numerous methods to unlawfully short agents the wages they rightfully earned. Many agents work at hourly rates that are blatantly below the District’s minimum wage. Arise also further cuts into agents’ pay by charging them for training and certification fees, requiring agents to purchase their own work equipment, requiring agents to work unpaid hours (such as meeting with supervisors), and docking agent pay for failing to meet performance standards.
OAG’s complaint alleges that Arise and Comcast violated the District’s MWRA and SSLA by:
- Failing to pay the minimum wage. The MWRA requires employers to pay employees a minimum wage, which is presently $15.20/hour. Arise and Comcast failed to pay agents minimum wage for all hours worked in violation of the MWRA. Agents were and continue to be paid sub-minimum hourly wages, which end up being further depressed after factoring in unpaid time spent training, meeting with supervisors, and performing other compensable work, as well as improperly charged fees for training, equipment, and administration.
- Failing to pay for split shifts. A split shift is a workday where an employee works two or more shifts that are interrupted by an unpaid break in time (that is not a meal period). When employees work a split shift, District regulations require employers to pay the employee an extra hour of pay at the minimum wage rate. Arise failed to pay agents for working split shifts in violation of the MWRA.
- Failing to pay the Minimum Daily Wage. District regulations establish a “Minimum Daily Wage” to ensure employees who regularly work at least four hours per day are guaranteed a minimum day’s pay when they report to work. The Minimum Daily Wage requires that when an employee reports to work, even if they are given less work for the day, an employer must pay the employee for at least four hours of work. Arise failed to pay agents in accordance with the Minimum Daily Wage requirements in violation of the MWRA.
- Failing to pay overtime. Arise and Comcast failed to pay overtime rates of at least 1.5 times the employee’s regular rate to agents who worked hours in excess of 40 hours per week in violation of the MWRA.
- Failing to provide sick leave. Arise and Comcast failed to provide agents with paid sick leave as required by the SSLA.
In this lawsuit, OAG is seeking damages for wages owed to agents as a result of Arise and Comcast’s minimum wage, overtime, and paid sick leave violations. OAG is also seeking penalties and an injunction against Arise and Comcast that stops the companies from continuing to exploit workers through their worker misclassification scheme.
A copy of the complaint is available here.
OAG’s Efforts to Protect Workers
Since gaining independent authority to investigate and bring wage theft cases in 2017, OAG has launched more than 50 investigations into wage theft and payroll fraud. OAG uses its enforcement authority to bring lawsuits and has taken action against a home health care provider, KFC franchises, a cell phone retailer, multiple construction companies, a security company, a café chain, and other businesses that harmed District workers. AG Racine also testified before Congress to highlight findings from an OAG report about how worker misclassification hurts workers, undercuts law-abiding businesses, and cheats taxpayers. In January 2020, OAG secured its largest wage theft settlement to date, requiring Power Design—a major electrical contractor—to pay $2.75 million to hundreds of harmed workers and the District over wage theft and worker misclassification claims. In September 2021, AG Racine hosted a roundtable discussion with workers and advocates to help workers understand their rights. In October 2021, AG Racine sued several construction companies for workers misclassification and for failing to provide overtime and sick leave.
AG Racine has also worked to hold gig economy companies accountable for following the same laws as brick-and-mortar businesses, including wage and hour laws. OAG sued food delivery service, DoorDash, for its practice of misleading and encouraging consumers to tip for food deliveries, and then pocketing those tips instead of passing them along to workers. OAG recovered $1.5 million in restitution that was returned to DoorDash drivers to replace tips the company kept for itself. OAG has also sued Instacart for including “service fees” on its platform that looked much like a tip for workers, but instead went to profit Instacart. OAG recovered $950,000 in restitution to car owners that experienced theft or damage to their vehicles while listed on the platform from Getaround, a car-sharing company, for failing to pay its taxes and misrepresenting its safety and security features.