Bethlehem-based kgb USA Inc., a provider of directory assistance and enhanced information service, will have to pay $1.3 million in compensation to more than 14,500 current and former employees for violations of the Fair Labor Standards Act, a judge ruled.
Federal Judge James Knoll Gardner of the U.S. District Court for Eastern Pennsylvania entered a consent judgment against the company over minimum wage compensation, and the company agreed to the terms.
The workers, hired to respond to text messages from customers, were home workers located throughout the United States.
The U.S. Department of Labor's Wage and Hour Division 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.
"Misclassification of workers as independent contractors is a serious threat to their livelihood. Misclassifying workers also undercuts responsible employers who must compete with unscrupulous employers who do not obey the law," said acting Secretary of Labor Seth D. Harris.
The investigation also disclosed 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.
For more information about whether a worker is an employee under the FLSA, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.
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