The U.S. Department of Labor obtained a consent judgment to recover $1.3 million in back wages for thousands of current and former employees of kgb USA Inc., the world’s largest independent provider of directory assistance and enhanced information services. The employees — homeworkers hired to respond to text messages from customers — were paid a piece rate based on the number of customer inquiries they replied to. But since the workers were employees rather than independent contractors as they were classified, they were guaranteed the protections of the Fair Labor Standards Act of 1938 (FLSA). When their earnings dipped below the minimum wage, FLSA violations occurred.
The misclassification of workers causes many problems. Misclassified workers are often wrongfully denied FLSA protections, and denied benefits such as unemployment insurance and medical leave. Misclassifying workers also causes losses to the Treasury, to Social Security and Medicare funds, state unemployment insurance, and workers’ compensation funds. In recent years, the Department of Labor has cracked down on employers misclassifying workers as independent contractors. The $1.3 million consent judgment obtained is the latest example. If you need more information on this subject, contact Brad Smelser, a lawyer in our Consumer Fraud section at 800-898-2034 or email Brad.Smelser@beasleyallen.com.
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