Directory Assistance Company Ordered to Pay $1.3 Million in Back Wages for Misclassifying Employees as Independent Contractors

Wednesday, February 13, 2013

A federal judge has ordered kgb USA Inc., the world's largest independent provider of directory assistance and enhanced information services, to pay $1.3 million in minimum wage compensation to 14,568 of its current and former employees nationwide for violations of the Fair Labor Standards Act.

Judge James Knoll Gardner of the U.S District Court for the Eastern District of Pennsylvania entered a consent judgment and order against the company, which agreed to the terms. The workers, who were hired to respond to text messages from customers, were home workers located throughout the United States. The company headquarters for kgb USA is in Bethlehem, Pa.

The consent judgment and order resolve an investigation by the U.S. Department of Labor's Wage and Hour Division that found the company misclassified employees as independent contractors and paid them a piece rate based on the numbers of text messages and inquiries they responded to, without regard to the number of hours they worked. FLSA violations resulted when piece rate earnings failed to yield at least the federal minimum wage of $7.25 per hour.

The investigation also revealed that the company failed to record and maintain accurate records of employees' hours worked, in violation of FLSA record-keeping requirements. Under the terms of the consent judgment, the company is ordered to pay the back wages found due in full and is enjoined from violating the FLSA in the future. The agreement requires compliance with all minimum wage, overtime and record-keeping provisions of the act, and specifies that kgb USA shall not classify any worker as an independent contractor unless the worker is a bona fide independent contractor and fails to meet the definition of an employee under the FLSA.

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