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Firm must pay $1.3 million in misclassification

February 13 2013

A company was ordered to pay $1.3 million in back wages to 14,568 current and former employees after it misclassified the workers as independent contractors, according to the U.S. Department of Labor. The company, kgb USA Inc., is a provider of directory assistance and enhanced information services, and it is based in Bethlehem, Penn.

The workers were hired to respond to text messages from customers and worked from their homes, according to the Department of Labor. The company misclassified the workers as independent contractors and paid them a piece rate based on the number of text messages and inquiries they responded to without regard to the number of hours worked, according to the department. Fair Labor Standards Act violations occurred when the piece rate earnings failed to yield at least the federal minimum wage of $7.25 per hour.

Under the terms of the consent judgment, the company is ordered to pay the back wages found due in full and must meet minimum wage, overtime and record-keeping provisions going forward.

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