Following a ruling by a federal judge, kgb USA Inc., an independent provider of directory assistance and enhanced information services, is to pay $1.3 million in minimum wage compensation to 14,568 of its current and former employees throughout the country after it violated provisions of the Fair Labor Standards Act.
These employees were hired to respond to text messages from customers and worked from home. The company has agreed to the ruling, which came following an investigation by the U.S. Department of Labor's Wage and Hour Division. That investigation found kgb USA had misclassified employees as independent contractors and paid them a piece rate in accordance to the amount of text messages and inquiries they responded and ignored the number of hours worked. FLSA violations came into play when piece rate earnings did not total to at least the federal minimum wage of $7.25 per hour.
"Misclassification of workers as independent contractors is a serious threat to their livelihood,” says acting Secretary of Labor Seth D. Harris. “Misclassifying workers also undercuts responsible employers who must compete with unscrupulous employers who do not obey the law. The Department of Labor is committed to ensuring that employees are classified properly so that they receive both the pay they rightfully earn and the protections to which they are entitled — including minimum and overtime wages, family and medical leave, and unemployment insurance."
Furthermore, the investigation discovered that kgb USA did not record and maintain accurate records of employees' hours worked as required by FLSA. Moving forward, kgb USA must pay the back wages in their full amounts and cannot violate other FLSA provisions. As mandated by FLSA, kgb USA must remain in compliance with all minimum wage, overtime and record-keeping provisions. The company must also not classify any worker as an independent contractor unless the worker is a bona fide independent contractor and does not meet the definition of an employee as defined by FLSA.