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Buyer owes $1.4 million for IC misclassification; owners personally liable

A federal court in San Francisco has ordered a Las Vegas telemarketing company to pay more than $1.4 million in back wages and liquidated damages to 1,328 workers it misclassified as independent contractors.

The judgment follows an investigation by the Wage and Hour Division of the US Department of Labor, which found Wellfleet Communications and its owners 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. Workers were paid commission for completed sales; workers who made few or no sales during a week, despite working long hours selling products for Wellfleet, received little or no pay.

Owners Allen Roach and Ryan Roach were held 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.

Incorporated in Nevada and based in Las Vegas, Wellfleet operated in the telemarketing services industry and contracted with telephone companies including AT&T and Verizon to sell various telecommunications products.

“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 US Department of Labor will use all the tools available to ensure workers receive the wages they are due.”

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