Case DescriptionCase Type: Wage & Hour
(December 11, 2012, Nashville) – City Gear, LLC (formerly Shelmar Retail Partners, LLC), the urban clothing chain, has been withholding more than $25 million in overtime pay owed to at least 200 Store Managers and Assistant Managers throughout the Southern and Midwestern United States. That’s the accusation at the heart of a collective action lawsuit filed today in the U.S. District Court for the Middle District of Tennessee by the law firms of Sanford Heisler Sharp and Barrett Johnston, LLC.
The collective action seeks unpaid overtime wages for store managers and assistant managers who work at retail clothing stores with brand names such as City Gear, Marty’s, Deveroes, CGP, Holliday’s Fashions, and The Vault. According to the complaint, City Gear, a Memphis-based company, violates the federal Fair Labor Standards Act (FLSA) by carrying out a company-wide scheme to wrongfully mislabel hundreds of its store managers and assistant managers as exempt from overtime wages.
In order to avoid its overtime obligations, the lawsuit alleges, the company pretends to pay these workers on a fixed salary basis when it, in fact, pays them hourly. When store managers and assistant managers work less than the company’s mandatory 45-hour minimum workweek, they receive prorated paychecks that subtract the hours they failed to work. The FLSA requires that hourly workers be paid overtime for working more than 40 hours in a week, but the company refuses to do so.
Plaintiffs allege that the company “invent[s] its own labor policy” in violation of federal law: “An employer is not entitled to pay its employees hourly up to a certain number of hours and then suddenly stop once that limit is reached,” said Jeremy Heisler, partner at Sanford Heisler Sharp and co-lead counsel for the plaintiffs. “City Gear takes advantage of its workers by requiring them to work 45 to 60 hours per week without overtime pay.”
The lawsuit alleges that these violations have been ongoing at least since 2006 when CEO Michael E. Longo took over the company. Just last month, plaintiff Denithia Pendergrass had her pay docked for working about 39 hours. Further, the complaint alleges, workers who complain about these violations are ignored or even threatened.
“The issue in this case is very simple,” said plaintiffs’ lead counsel Grant Morris. “If the company wants to pay its employees hourly, and not pay them when they don’t work, it also has to pay them hourly for all the time that they do work. The company can’t have it both ways. We are confident that the Court will find an obvious FLSA violation. This is a blatant subversion of the law.”
City Gear is a rapidly-expanding clothing retailer with more than 100 stores throughout the South and Midwest. In 2011, it employed approximately 500 workers and had revenues of $64.5 million. Since then, the company has grown considerably and the lawsuit alleges that it is garnering record profits on the backs of the workers in this case.
Lead Counsel Jeremy Heisler has a message for the company’s management: “Pay your workers. Overtime pay is a right, not a privilege. When it’s 9 or 10 o’clock at night and your workers are finally logging out and locking the store, you have to pay them for their sweat and labor. The law allows no excuses.”
“Because overtime laws are designed to help motivate companies to hire more workers to get the job done, they’re the kind of economic stimulus that we can’t overestimate in today’s economic climate,” said Andrew Melzer, a member of the Sanford Heisler legal team.
Representing the Plaintiffs are David Sanford and Grant Morris in Sanford Heisler Sharp’s Washington, D.C. office, Jeremy Heisler and Andrew Melzer in the firm’s New York office, and Doug Johnston and David Garrison of Barrett Johnston in Nashville.
The plaintiffs’ attorneys estimate the Company’s liability at more than $25 million. The suit demands that City Gear immediately stop its unlawful pay practices and pay plaintiffs and all store managers and assistant managers the unpaid wages due to them plus all damages permitted by the FLSA.
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