Las Vegas Telemarketer to Pay $280,000 for Misclassifying Employees

Tuesday, February 10, 2015

The U.S. District Court in Nevada has ordered a Las Vegas-based telemarketing company to pay $280,000 in minimum wage and overtime back wages and an equal amount in liquidated damages to 398 employees for violations of the Fair Labor Standards Act. The consent judgment resolves a lawsuit filed by the U.S. Department of Labor against Intelliconnect Communications LLC, owners Brenda Portela and Stephanie Meehan, and S&M Management Services Inc., a successor employer.

The department's Wage and Hour Division investigation found that from January 2010 through December 2012, Intelliconnect classified its telemarketers as independent contractors, which denied them minimum wage and overtime wages. Investigators found the employer paid the telemarketers based on a percentage of individual sales, resulting in many of them working for days and weeks for little or no pay.

The court ordered that Intelliconnect be independently monitored for the next three years to ensure future compliance because of the nature and circumstances of the violations found, and it prohibits any retaliation against employees for accepting back wages or for exercising their rights under the FLSA. The company must take additional proactive measures to ensure future compliance.

Additionally, Intelliconnect and its owners admitted to the misclassification of employees and agreed to annual training sessions for a period of three years, and to produce and maintain for workers explanations when they claim a worker is exempt from minimum wage and overtime. 

Intelliconect provides telemarketing services to companies, such as those purchasing utility and phone lines from larger companies, and sells them to residential and commercial customers. 

Under the FLSA, employers must distinguish employees from bona fide independent contractors. The inquiry to determine a worker's status as an employee or independent contractor is whether the worker, as a matter of economic reality, is dependent on the employer or in business for himself. 

The FLSA requires that covered employees be paid at least the minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.

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