Company Pays $1.3 Million for Misclassified Independent Contractors

The world’s largest directory assistance provider, kgb USA Inc., has agreed to pay $1.3 million in back pay to 14,658 workers it misclassified as independent contractors.  

The workers were hired to respond to text messages from customers. The workers were paid a piece rate based on the number of text messages and inquiries they answered regardless of the number of hours they worked.  In some cases, this resulted in the workers making less than the federal minimum wage of $7.25 per hour.   

An investigation by the U.S. Department of Labor (DOL) revealed the misclassification and recordkeeping violations. In addition to paying back pay, kgb also agreed that it would not classify any worker as an independent contractor going forward unless it was certain that status was proper.

Ferreting out independent contractor misclassifications remains a priority for the DOL and other federal and state agencies. States (e.g., Colorado) may impose additional penalties for misclassification.  Contact MSEC to make sure that your independent contractor classifications are correct and see our FYI Independent Contractors – Overview for more information.