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After more than a decade of courtroom drama that stretched from federal benches to the highest court in Washington state, Xerox Corp. has agreed to pay $9.1 million to settle a sprawling wage-and-hour lawsuit involving over 5,700 call center workers. The resolution brings a curtain down on a rare and lengthy dispute over the company's Achievement Based Compensation (ABC) plan, which plaintiffs argued ran afoul of state minimum wage laws.

The preliminary approval request, filed Friday in Washington federal court, describes the deal as a strategic move to avoid the mounting risks and costs of further litigation and appeals.

"This settlement is an excellent result given the risks of continuing to litigate through trial and appeals," the workers’ attorneys emphasized.

The Anatomy of the Settlement

The proposed agreement divides the class into two groups:

• 4,771 workers who remained active in the litigation

• 965 workers previously dismissed in February 2024 after Xerox secured a summary judgment win in a related case

Despite their dismissal, the second group will still receive 10% of the net settlement amount, while the primary class takes 90%.

Where the Money Goes

Of the $9.1 million pot:

• $3.1 million is earmarked for attorney fees

• $82,000 covers litigation expenses

• $15,000 goes to lead plaintiff Tiffany Hill

• $3,000 to newly added plaintiff Michelle Anderson

• $34,500 to $46,000 is budgeted for settlement administration, depending on whether one or two rounds of distributions are needed

The Root of the Dispute: ABC Pay Plan

The case traces its origin to 2012, when Hill first filed suit. The core issue? Xerox’s ABC plan, which compensated employees based on completed tasks and awarded bonuses to meet minimum wage thresholds — but failed to pay for so-called “unproductive” work, such as logging in or waiting between calls.

In 2014, U.S. District Judge John C. Coughenour denied Xerox’s motion concerning how to interpret its pay structure. The issue escalated to the Ninth Circuit in 2017, which then punted the question to the Washington Supreme Court due to its reliance on state law.

In a nuanced decision, the state’s highest court concluded that the ABC plan was not a traditional piecework system but did not offer a clear alternative classification. That ambiguity lingered until February 2024, when Judge Coughenour ruled in favor of characterizing the ABC plan as an hourly compensation scheme — a pivotal turning point.

A month later, the court granted summary judgment to the workers, finding Xerox’s payment model violated the Washington Minimum Wage Act.