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Secretary of Labor Thomas E. Perez
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News Release

WHD News Release: [02/12/2013]
Contact Name: Joanna Hawkins
Phone Number: (215) 861-5101
Release Number: 13-0066-PHI

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

Company misclassified employees as independent contractors; failed to pay minimum wage

BETHLEHEM, Pa. — 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.

"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 Department of Labor is committed to ensuring that employees are classified properly so that they receive both the pay they rightfully earn and the protections to which they are entitled — including minimum and overtime wages, family and medical leave, and unemployment insurance."

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.

For more information about whether a worker is an employee under the FLSA, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their hourly rates for hours worked beyond 40 per week. Additionally, accurate records of employees' wages, hours and other conditions of employment must be maintained.

For more information about the FLSA and other federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or its Wilkes Barre District Office at 570-826-6316. Information also is available at http://www.dol.gov/whd/.