Airbnb, battered by the pandemic recession, announced in May that it would be laying off a quarter of its workforce. In a post hailed for its empathy and transparency, CEO Brian Chesky wrote, “We will have to part with teammates that we love and value.” He outlined a generous severance package. Departing employees would receive 14 weeks of pay plus an extra week for each year at the company; help from professional recruiters to land new jobs; and 12 months of continued health insurance.

Around the time Chesky made this announcement, another group of people working with Airbnb also lost their jobs. But these weren’t called layoffs and weren’t accompanied by a compassionate note from the CEO. And the workers, who handle the day-to-day tasks of bookings, cancellations and keeping the peace between guests and hosts, got no severance. There was no health insurance plan to be extended.

These American workers — cheap, disposable and isolated — worked through a company called Arise Virtual Solutions, a little-known business that has helped some of America’s best-known businesses shed labor costs.

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You may not have heard of Arise, but chances are, you’ve talked to an Arise agent — perhaps when you thought you were talking to a Comcast employee about a bill or a Disney employee about a reservation. Arise lines up customer service agents who work from home. It then sells this network of agents to blue-chip corporations.

Arise and most of its corporate clients consider preserving the secrecy of this arrangement to be vital. An Arise company manual says, “The confidentiality of information related to Arise and its clients must be maintained forever.” Arise’s agents are forbidden from publicly identifying the brand-name companies whose customers’ calls they answer. Even commiserating in a private Facebook group, they avoid typing out Airbnb, opting instead for rather flimsy code. The “bed and breakfast client,” some write. One used “sky bnb.”

Arise’s workers not only don’t work for its clients, they also don’t officially work for Arise. Like Uber drivers or TaskRabbit gofers, they are independent contractors. To get gigs, they first absorb substantial expense, paying for their own equipment and training, and then have fees deducted from every paycheck for the “use” of Arise’s “platform.”

Arise has faced, and lost, legal challenges alleging that its arrangements with agents violate federal labor law and cheat workers of what they are rightfully owed. One judge called the arrangement an “elaborate construct” created by Arise to get around labor law. Nevertheless Arise has been able to avoid altering its model in any significant way, aided in part by a 5-4 ruling from the Supreme Court, written by Trump appointee Neil Gorsuch.

Arise not only creates separation between its corporate clients and individual agents, it also allows those companies to quickly add or subtract workers. In March, Instacart needed all kinds of agents. By May, those jobs had largely disappeared. “I was there for a week. We’re disposable,” one Florida agent dropped from Instacart assignments told ProPublica.

The “biggest benefit” Arise provides is to help companies “squeeze wastage out of a typical workday,” as John Meyer, a former Arise CEO once explained to a trade publication. Meyer, who has remarked that “business is sports for adults,” said that “a typical employee has a utilization rate of 65 percent because you’re paying for their lunch, breaks, and training.” Without that “low utilization” and other overhead, Arise costs up to 30% less than a traditional call center, Meyer said.

With American roots going back to the 1990s, Arise’s list of corporate clients, past and present, includes not only Airbnb, Comcast, Instacart and Disney, but also Amazon, Apple and AT&T. There’s also Barnes & Noble, eBay, Intuit, Home Depot, Staples, Princess Cruises, Peloton, Signet Jewelers, Virgin Atlantic and Walgreens. It is now owned by Warburg Pincus, the private equity firm where former Treasury Secretary Timothy Geithner is president.

Arise has been a pioneer in driving two currents roiling the American labor market. Ever more people are working from home, and workers are increasingly treated as independent contractors, stripped of the right to minimum wage, overtime and other legal protections provided to employees.

The pandemic has accelerated these forces. Many physical call centers have closed but companies still need someone to answer their customers’ calls, chats and emails, a need answered by Arise and its peer companies like Liveops, NexRep and Working Solutions. The work-from-home customer service business, in which an estimated 500,000 Americans worked even before the pandemic, is booming.

For this story, ProPublica obtained transcripts of arbitration hearings, financial slides, corporate contracts and other records that provide an unusually close look at Arise, a major player in this underground industry. Arise requires agents to sign nondisclosure agreements as a condition of working, but ProPublica was able to interview dozens of former or current agents and employees at Arise’s corporate headquarters.

Arise executives declined to be interviewed for this story, as did Meyer, the former CEO. In legal proceedings, Arise has consistently said that it follows the law and that its practices are “transparent every step of the way.” The company provided ProPublica a written statement that said Arise’s system was a boon for those who work through it, people it calls “Service Partners.”

“The Arise® Platform is not necessarily a guarantee of success — the work can present challenges like any other, and it can be dependent on demand like many independent contractor arrangements — but it offers significant flexibility” for its customer service agents, the statement said. “In our 25-year history, our platform and the opportunities it provides have overwhelmingly shown positive outcomes for Service Partners who use the Arise® Platform to do the meaningful work they love and choose to do.”

ProPublica reached out to 38 corporations that have contracted with Arise over the years. After being contacted by ProPublica and asked about Arise’s labor practices, Signet, the corporation that owns Zales, Kay and Jared jewelers, “paused” its relationship with Arise “pending further due diligence,” according to a company statement that noted almost all of Signet’s customer service agents are in-house.

The vast majority of the corporations either didn’t respond or declined to answer our questions. From Home Depot: “We … don’t have anything to add here.” From Airbnb: “We do not have additional comment here.”

Arise isn’t so reticent when talking itself up to potential clients. In a webinar this spring, CEO Scott Etheridge talked about Arise’s explosive growth during the pandemic. In April the company saw a surge of new agents, bringing its network up to 70,000. Arise, Etheridge said, is “changing the way the world works.”

Between 400 and 740 Seconds

After paying about $1,500 for home office equipment: a computer, two headsets and a phone line dedicated to Arise; after paying Arise to run a check on her background; after passing Arise’s voice-assessment test and signing Arise’s nondisclosure form; after paying for and passing Arise’s introductory training, to which she devoted three days, unpaid; after paying for and passing a certification course to provide customer service for Arise client AT&T, to which she devoted 44 unpaid days; after then being informed she had to get more training yet — an additional 10 days, for which she was told she would be paid, but wasn’t; and then, after finally getting a chance to sign up for hours and do work for which she would be paid (except for her time spent waiting for technical support, or researching customer issues, or huddling with supervisors), Tami Pendergraft spent three weeks fielding telephone calls from AT&T customers, after which she received a single paycheck.

For $96.12.

To understand what happened to Pendergraft, picture a hanging chain. The first link, at the top, is a big company with many customers who have questions about their bill or some product or service. This big company contracts with Arise, the second link. Arise contracts with smaller businesses, the third link. These small businesses are often a lone person who incorporated because Arise’s business model demanded yet another corporate layer. They contract with an agent — such as Pendergraft — who is the fourth and bottom link. So the agent assisting the big company’s customers doesn’t work for the big company: she is three links removed.

How Agents Pay To Work

The Arise business model requires customer service reps to pay for their own equipment and training, along with fees from each paycheck.

For playing the middle link, Arise charges both sides: the corporate clients, who often pay millions, and the network of workers, composed overwhelmingly of women and people of color.

To prospective agents, Arise touts that you can “be your own boss,” as its website says. “Set your own schedule.” “No commute, no suit!” Arise targets its pitch to those who might have limited mobility or options: stay-at-home mothers, caretakers, military spouses or people with physical disabilities. Some agents do find freedom and a reliable source of income. Arise has produced several videos of business owners praising the platform. The president of Girlicity, which, according to its blog, is Arise’s largest business partner, praised the company in a video as “a perfect fit.”

But often people discover that despite the layers of legal paperwork between them, the brand-name company at the top can still retain strict control over agents at the bottom. Rigid workplace formulas often govern everything from length of calls to frequency of refunds. Deviate from these standards and an agent can lose her job.

Control over the agents in Arise’s network can extend beyond work-performance measures. Some contracts require agents to work a set number of weekends and holidays. In multiple contracts reviewed by ProPublica, Arise reserved the right to make agents submit to drug testing “at any time.” And one former agent, testifying in an arbitration hearing, said: “Arise sent two instructors to my home, to audit my home. I’m not sure exactly what they were looking for, but they checked my ID. They looked around, too. They took a look at my internet connection.”

And the work often isn’t as lucrative as people hope. Many agents find that the pay, after the cost of training and fees to Arise, dips well below minimum wage.

When Tami Pendergraft first heard of Arise, it was 2012. She was in her 40s and unemployed. She had attended college in Missouri and gone on to live in Houston. For 20-plus years, she had worked in information technology sales. Then she hurt her back and sought work from home. Arise offered her that chance. It was her first job in customer service.

Pendergraft, citing her nondisclosure form with Arise, declined to be interviewed for this story. But her account can be found in arbitration hearing transcripts.

Pendergraft testified that she put in “50, 55” unpaid hours a week during the AT&T training, which cost her $199. “Practice, practice, practice, practice,” instructors told trainees, who had to pass a succession of tests to keep moving on. Her class — or “wave,” as each was called — had about 60 people at the start. All paid to take the course. Only half finished. They did not get their money back.

Once Pendergraft was certified, she was obligated to work at least 20 hours a week. But come her turn to sign up for shifts, “there would be nothing left,” she said. Any slots available to her were chopped up, “30 minutes here, 30 minutes there. It was all broken up.” She realized she couldn’t have a life and meet her contractual requirements. When she did get hours, she was paid for time talking, not waiting, even though she was tethered to her computer and headset: “Sometimes I wouldn’t get a call for 30, 40 minutes, sometimes an hour, and I’d just have to sit there.”

Disgusted, Pendergraft quit.

“I felt like I did my part in good faith,” she testified, but “nobody really cared.”

Then she sued.

Around the country, other agents did, too, joining federal class-action lawsuits filed against Arise in 2011, 2012, 2013 and 2016.

A woman from Douglasville, Georgia, filed a declaration saying her initial Arise training had cost her approximately one week and $99. She then worked with six companies that contracted with Arise. To be eligible for each gig, she paid an upfront training fee, and for each, her training time was unpaid. She approximated the training commitments and fees:

• Jewelry TV: one week; $50

• Sears: 30 days; $200

• Walgreens: 30 days; $159

• TurboTax: 30 days; $59

• Rogers (a Canadian telecom): six weeks; $279

• AT&T: 90 days; $179

Added up, she had spent about $1,000 for abou