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kgb USA to Pay $1.3M in Back Wages for Employee Misclassification

February 13, 2013

In a recent employee misclassification lawsuit development that Costa Mesa-based Vincent Howard has been following, a federal judge has reportedly ordered kgb USA Inc., the independent provider of enhanced information services and directory assistance around the world, to compensate 14,568 of its former and current nationwide employees with $1.3 million, for violations of the Fair Labor Standards Act (FLSA).

The lawsuit reportedly stemmed from a U.S. Department of Labor's (DOL) Wage and Hour Division (WHD) investigation that found the company responsible for misclassifying employees who were hired to respond to customers' text messages, as independent contractors. The employees work out of their homes around the country, and were reportedly paid on a piece rate basis depending on the number of inquiries and text messages they responded to--regardless of the number of hours they worked. The company allegedly violated the FLSA when the workers' piece rate earnings did not add up to the federal minimum wage of $7.25.

The FLSA requires that employees covered under the act must be paid at least $7.25 per hour, the federal minimum wage, for every hour worked, plus one and one-half their hourly rates for any time worked beyond forty hours in a work week.

The WHD investigation found that kgb USA also failed to record and maintain records of all employee hours worked--a record-keeping requirement of the FLSA. The company is ordered, under the consent judgment, to pay all back wages to employees and is banned from violating the FLSA in the future. The company is also prohibited from classifying any worker as an independent contractor in the future, unless the worker is an actual independent contractor and does not meet the FLSA's definition of an employee.

As Vincent Howard frequently discusses in Howard Law's Santa Ana employment lawyers blog, employee misclassification poses a serious threat to California workers, and workers nationwide, in regard to violations of overtime payments, minimum wage compensation, meal and rest breaks, and employee benefits. Employee misclassification also harms honest employers who are trying to compete with employers who break labor laws.

US Labor Department obtains consent judgment to recover $1.3 million in back wages for more than 14,500 workers of kgb USA Inc., U.S. Department of Labor, February 2, 2013

Related Web Resources:

U.S. Department of Labor: Wage and Hour Division (WHD), Fair Labor Standards Act (FLSA)

Department of Labor (DOL): Wage and Hour Division (WHD)

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