Company owners held personally liable after US Department of Labor investigation
A Las Vegas telemarketing enterprise that shortchanged more than 1,328 call center workers has been ordered to pay more than $1.4 million in back wages and liquidated damages by a federal court in San Francisco. The judgement follows a U.S. Department of Labor investigation that found Wellfleet Communications and its owners illegally misclassified employees as independent contractors, forcing them to unlawfully sign away their federal rights and paying them only when they made sales.
The 9th U.S. Circuit Court of Appeals affirmed the findings of a Department of Labor investigation and subsequent judgment in the U.S. District Court for the District of Nevada against Wellfleet Communications LLC, its sister companies Lighthouse Communications LLC and New Choice Communications Inc., and owners Allen Roach and Ryan Roach. Incorporated in Nevada and based in Las Vegas, Wellfleet Communications LLC operated in the telemarketing services industry and contracted with telephone companies including AT&T and Verizon to sell various telecommunications products.
The court’s action follows an investigation by the department’s Wage and Hour Division that found Wellfleet and the Roaches violated the federal Fair Labor Standards Act by willfully misclassifying employees as independent contractors and demanding call center workers sign agreements that claimed to waive their FLSA rights. The employers then paid workers a commission for completed sales, with no guarantee of the required federal minimum wage. As a result, workers who made few or no sales during a week, despite working long hours selling products for Wellfleet, received little or no pay.
“Employers who misclassify workers as independent contractors deny them their hard earned wages and other benefits such as paid leave and health insurance. The division prioritizes preventing this type of exploitation and works tirelessly to hold employers accountable,” said Acting Wage and Hour Administrator Jessica Looman. “The U.S. Department of Labor will use all the tools available to ensure workers receive the wages they are due.”
The court affirmed the department’s finding that Allen and Ryan Roach were personally liable for the FLSA violations, and were ordered to repay $728,994 in back wages and an additional $728,994 in liquidated damages to the affected employees.
“The Department of Labor will defend the rights of workers to be paid as the Fair Labor Standard Act requires, and seek to recover back wages and liquidated damages when an employer violates those rights,” said Acting Regional Solicitor of Labor Susan Kumli in San Francisco.
“This investigation and litigation should serve as a stern reminder of the consequences that face those employers who take advantage of their workers and competitors.”
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