Why this call center’s labor dispute might cost it a $7 billion contract

In what some are hailing as a win for workers, the Biden administration has told a call center operator with a history of contentious labor disputes that it will have to reapply for its current $7 billion federal contract—eight years ahead of schedule. Agency officials specifically noted the addition of a “labor harmony” requirement to the contract.



On May 16, the Department of Health and Human Services issued a request for proposals to rebid a 2022 call center contract with Maximus Inc. Maximus workers have struck six times since 2018 and accused the employer of various union-busting tactics. Under labor harmony—often also referred to as “ labor peace ”—employers negotiate with workers for a guarantee of no strikes, pickets, or other labor disruptions.   



The contract covers the company’s roughly 10,000 call center employees who take phone calls from people applying for health coverage under the Affordable Care Act (ACA) healthcare exchanges and Medicare. Workers have struck in Florida, Louisiana, Mississippi, Kentucky, and Virginia—all right-to-work states. The contract, signed less than two years ago , was slated to pay out $6.6 billion over a 10-year period ending in 2032.



Observers say the rebid lays the groundwork for making similar demands of more federal contractors. 



Maximus spokesperson Eileen Rivera called the move “completely unwarranted” in an emailed statement. 



In a May earnings call, Maximus CEO Bruce Caswell told investors that the company may contest the rebid with a “pre-award protest” to the Government Accountability Office. He has also described the Health and Human Services announcement as “unprecedented” and “a premature rebid of a successfully performing contract.”



Rep. Cori Bush speaks at a December protest outside the headquarters of the Department of Health and Human Services in Washington, D.C. Photo: [Photo: Paul Morigi/Getty Images for Communications Workers of America]



The rebid comes after members of Congress pressured Maximus to cease alleged union-busting and improve working conditions for call center workers. As early as 2020 , elected officials were calling on Maximus to meet with organizers. In October 2023, before Maximus workers conducted their sixth strike, Sen. Bernie Sanders wrote a letter to Maximus CEO Caswell urging the company to “commit to better wages and working conditions for workers, and to follow the law and respect workers’ right to organize.” On December 12, 2023, members of the House of Representatives including Ro Khanna and Cori Bush, attended a protest at the headquarters of the Department of Health and Human Services in Washington, D.C. Maximus workers were arrested at the event alongside Claude Cummings Jr., president of the workers’ chosen union, the Communications Workers of America.



On December 15, 2023, Health and Human Services announced its intention to rebid the contract , and public officials began to pressure the agency to follow through. In February 2024, 10 members of congress signed a letter urging HHS to rebid while allowing workers to keep their jobs . Later that month, Maximus worker Audrianna Lewis confronted Health and Human Services Secretary Xavier Becerra at a Washington, D.C., event, urging him to intervene on behalf of workers.



On May 16, the Centers for Medicare and Medicaid Services (CMS) posted a request for proposals with a deadline of June 28. While CMS did not respond to questions about the process, Caswell, Maximus’s CEO, told investors that the contracting process can take between one and three years. 



Maximus workers are arrested during a protest outside the Department of Health and Human Services in Washington, D.C. [Photo: Paul Morigi/Getty Images for Communications Workers of America]



The administration’s effort to add labor peace as a contract requirement could have significant implications for workers outside of Maximus’ call centers, said Anastasia Christman, a senior policy analyst at the National Employment Law Project. Similar provisions are often used in federal construction contracts , although the Biden administration has been encouraging broader use of these provisions with other federal contractors. The potential workforce affected is huge; today, roughly 2.6 million Americans are employed through federal construction and service work contracts alone .



By pushing for labor harmony, said Christman, the federal government is signaling that it will not tolerate union-busting among contractors, which may encourage other shops to organize. “If an employer engages too strenuously in anti-union behavior, that contract could be jeopardized, because the ability to service it without disruption could be jeopardized,” Christman said. “HHS is finally recognizing how hard it is to do a good job servicing this really important program when you yourself are struggling.” 



Trading away their legal right to strike is “not a minor concession” for call center workers, said Christman. In exchange for ceding the right to organize strikes, unions may negotiate concessions from employers. Those concessions can include an employer’s commitment to remain neutral in a union organizing drive and to recognize a union if a majority of workers sign union authorization cards—known as “card check”—rather than requiring a formal election. Card-check agreements increase the success of union drives, and neutrality curtails union-busting.



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Maximus, meanwhile , objects to the rebid. 



Rivera, the Maximus spokesperson, said, “We have outperformed customer service metrics and achieved record customer satisfaction levels, while respecting occasional labor-organizing activities which have not disrupted operations or the continuity of service.” Rivera did not address questions about whether Maximus plans to apply for the new contract, but added, “We do not believe there is a basis in law or regulation that allows HHS and CMS to insert a mandatory Labor Harmony Agreement.”



Stan Soloway, an expert in federal contracts who has consulted for Maximus, said that when a contractor is performing well, there is no reason for the company to go through the “hassle and expense” of competing for the contract again.



Workers see the rebid differently. The Communications Workers of America, the union seeking to represent Maximus workers, has filed 21 Unfair Labor Practices against Maximus since 2018. These allege a range of union-busting tactics: threats of retaliation against union supporters, illegal surveillance of workers, providing benefits to nonstriking workers, and attempting to physically remove workers from the premises who were engaging in protected activities. Last fall, during the ACA’s open enrollment period, Maximus workers seeking union recognition with the Communications Workers of America staged the largest ever strike of federal call center employees, and hundreds have participated in repeated strikes primarily at the company’s Bogalusa, Louisiana, and Hattiesburg, Mississippi, call centers.



Indeed, while Maximus has argued against a union on the grounds that workers report high job satisfaction, workers interviewed by Capital & Main take a different view . They report a crushing workload and frustrated callers, some of whom make racist remarks to the largely Black and Latina workforce. Workers also report limited bathroom breaks (which Maximus denies), unaffordable health insurance , and low wages. A 2023 report from the NAACP also suggested the company has significant racial occupational segregation and offers call center workers little chance for advancement.



Lakeisha Preston, a nine-year call center veteran involved with the union effort, works 10-hour shifts as an “internal support group agent,” helping her coworkers handle challenging calls. She also reports earning less than $20 per hour.



“We shouldn’t have to be working so hard just to survive,” she said. 



Preston says it’s empowering to see their efforts yield results.



“It’s amazing that we’ve been heard,” she said. “We’re not done yet.”



— Jesse Baum , Capital & Main







This piece was originally published by  Capital & Main , which reports from California on economic, political, and social issues.