Minnesota Attorney General Keith Ellison announced on Dec. 19 that his office has obtained a settlement with Arise Virtual Solutions Inc. (“Arise”) to resolve allegations that the company misclassified its workers as independent contractors instead of employees and violated Minnesota laws that ensure minimum wage, overtime, and rest breaks. As part of the settlement, Arise agreed to pay $300,000 in restitution to workers and to stop doing business in Minnesota.
Arise is a Florida-based gig work company that connects work-at-home customer service agents to corporations that are seeking to outsource call center services. In the last four years, about 300 customer service agents located in Minnesota worked on the Arise platform.
Each worker completed lengthy unpaid training courses before Arise allowed them to work as customer service agents. Because Arise treated these workers as independent contractors, they were not entitled to minimum wage, overtime, meal and rest breaks, workers compensation, unemployment insurance, and other important employment protections.
“Employer misclassification fraud hurts workers who were misclassified and their families, but it also hurts businesses who play by the rules and are undercut by competition willing to break the law,” Ellison said.
“Misclassification also harms Minnesota taxpayers, because employers who misclassify do not pay what they owe and the rest of us are forced to make up the difference. This settlement against Arise is another welcome victory in my ongoing fight to ensure Minnesotans are not being shortchanged by employers who misclassify and put profits over people.”
Any Minnesota-based worker who trained or performed work on the Arise platform since May 19, 2020, is eligible to receive a portion of the $300,000 settlement fund. A claims administrator will contact eligible workers via mail, email, and/or phone about receiving restitution payments.
Employer misclassification fraud happens when an employer incorrectly classifies an employee as an independent contractor, resulting in that employee losing access to rights, benefits, and protections available only to employees. The Office of the Legislative Auditor (OLA) released a report earlier this year finding that misclassification fraud was a growing problem in Minnesota. Of the workplaces audited, the OLA found that 22% of employers misclassified at least one employee.
In July 2023, Ellison formed an Advisory Task Force on Worker Misclassification to study the issue of worker misclassification and its impacts, explore best practices in policy and enforcement, and propose a set of recommendations for both enforcement and regulatory reform.
In early 2024, the task force adopted a policy proposal that helped form the basis for a landmark bill to combat employer misclassification fraud, which passed in the 2024 legislative session. Among other things, the bill created the Intergovernmental Misclassification and Enforcement Partnership, in which the Attorney General works alongside other state enforcers to maximize efforts to detect, investigate, and deter employee misclassification. The bill also created a private right of action for victims of employer misclassification fraud and increased penalties to provide meaningful deterrence.
Workers with concerns or complaints about misclassification or other systematic violations of state and federal wage laws can contact the Attorney General’s Office through its online complaint form (available in Spanish or English). The Office can also be contacted by calling 651-296-3353.
It’s good that all these states are going after Arises but while they are winning big money for alot of people they are also forcing Arise to stop contracting with people in their state. As someone who has contracted with Arise for a while now, I think these attorneys general are going about this the wrong way or, more accurately, punishing Arise for the wrong thing and by so doing are leaving alot of people who just are not fit for regular jobs out in the cold. AGs need to stop doing the same thing al the other ones are doing and look at this differntly. Arise needs to be made to pay those who work for them at least the minimum wage in the state in which they work. I’ve done both W2 and 1099 work and believe me this is just W2 work without the perks. Also, we are told our contracts are with the individual companies we take calls for and I don’t have one with that company. My contract is with Arise. No one seems to be able to tackle all the problems here but putting people out of work is not the answer. Arise,- the company which we all have an actual contract with- needs to be made to pay a fair wage.
Agreed, now we are out of our work at home job, which I thoroughly enjoyed even though I knew I was not being paid properly. But with Arise, the scheduling was very very flexible and worked perfectly for me. Now we will be lucky to get any amount of money from this lawsuit, which I haven’t heard a word about since or been contacted by anyone regarding it.