Court orders telemarketer to pay $560K in back wages, damages to hundreds of employees in Las Vegas after US Labor Department investigation

LAS VEGAS — The U.S. District Court in Nevada has ordered a Las Vegas-based telemarketing company to pay $280,000 in minimum wage and overtime back wages and an equal amount in liquidated damages to 398 employees for violations of the Fair Labor Standards Act. The consent judgment resolves a lawsuit filed by the U.S. Department of Labor against Intelliconnect Communications LLC, owners Brenda Portela and Stephanie Meehan, and S&M Management Services Inc., a successor employer.

The department's Wage and Hour Division investigation found that from January 2010 through December 2012, Intelliconnect classified its telemarketers as independent contractors, which denied them minimum wage and overtime wages. Investigators found the employer paid the telemarketers based on a percentage of individual sales, resulting in many of them working for days and weeks for little or no pay.

"We will not allow employers to arbitrarily misclassify their employees as independent contractors and deprive them of their hard-earned wages and benefits," said Gaspar Montanez, district director for the Wage and Hour Division in Las Vegas. "We will use every tool available to prevent violations of the basic protections guaranteed by the FLSA. It is outrageous to see employers like this attempting to profit by denying extremely vulnerable workers their deserved and desperately needed wages."

"This is a classic example of a complete disregard for employees' basic rights," said Janet Herold, the department's regional solicitor in San Francisco. "It is unacceptable for employers to cheat workers of the simplest right to be paid their full wages for all hours worked and to cheat taxpayers of the payroll taxes due. This must stop. This judgment is part of the department's effort to make sure that these schemes fail."

The court ordered that Intelliconnect be independently monitored for the next three years to ensure future compliance because of the nature and circumstances of the violations found, and it prohibits any retaliation against employees for accepting back wages or for exercising their rights under the FLSA. The company must take additional proactive measures to ensure future compliance.

Additionally, Intelliconnect and its owners admitted to the misclassification of employees and agreed to annual training sessions for a period of three years, and to produce and maintain for workers explanations when they claim a worker is exempt from minimum wage and overtime.

Intelliconect provides telemarketing services to companies, such as those purchasing utility and phone lines from larger companies, and sells them to residential and commercial customers.

The division's Las Vegas District Office conducted the investigation. The department's Regional Office of the Solicitor filed the consent judgment.

Under the FLSA, employers must distinguish employees from bona fide independent contractors. The inquiry to determine a worker's status as an employee or independent contractor is whether the worker, as a matter of economic reality, is dependent on the employer or in business for himself. For more information, visit http://www.dol.gov/whd/regs/compliance/whdfs13.htm.

The FLSA requires that covered employees be paid at least the minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.

For more information about federal wage laws, call the Wage and Hour Division's toll-free helpline at 866-4US-WAGE (487-9243) or its Las Vegas District Office at 702-928-1240. Information also is available at http://www.dol.gov/whd/.