Clothing Company Settles for $2M in Wage and Hour Suit

City Gear LLC has agreed to pay nearly $2 million to settle allegations that the clothing company labeled managers as salary-based to avoid paying overtime, but continued to dock pay when these employees failed to work 40 hours per week. A current and former store manager filed the class action in December, claiming that the clothing company withheld over $25 million in overtime pay that should have been divided amongst store managers across the Southwest and Midwest. The suit claims that City Gear violated both the Fair Labor Standards Act (FLSA) and Tennessee state laws.

The company also began docking employees’ paychecks.

If approved, the settlement will cover at least 280 store managers and assistant managers who work for either City Gear or its subsidiaries, including Marty’s, Deveroes, CGP, Holliday’s Fashions and The Vault. The settlement will provide for $1.9 million in stocks and payments, with a portion also covering attorneys’ fees. Early calculations estimate that nearly one fifth of the class members will receive as much as $10,000 each, with the remainder of the class collecting varied amounts under that figure, providing “substantial and immediate relief” to the managers, according to the plaintiffs.

In 2009, City Gear introduced a new payment policy where store managers and assistant managers were required to work a minimum 45-hour work week under a set salary. However, at that time, the company also began docking employees’ paychecks who did not work a 40-hour work week.

“An employer is not entitled to pay its employees hourly up to a certain number of hours and then not pay them at all once that limit is reached,” according to the complaint.

City Gear claims it has since changed its policies regarding employee payment to “fully comport with the FLSA and Tennessee law.”