Mass. Attorney General's Office Found Student-Run Harvard Shop Owed Employees $46,000, Violated Labor Laws

When Harvard Student Agencies managers hold their weekly meetings, they usually recite the organization’s mission statement, written at the time of its founding in 1957 — “to defray the expenses of [student employees’] education,” according to former HSA President Ali Dastjerdi ’19.

“Our role as an institution is that we pride ourselves on how much we pay students,” said Dastjerdi, who served as HSA president for most of 2018. “I mean our charter quite literally says to defray the expense of education. Our existence is there to pay students more.”

But for three years, one of HSA’s branches — The Harvard Shop — did the opposite.

Last year, the Massachusetts Attorney General’s Office found that HSA violated Massachusetts labor laws and owed employees $46,276.38 in unpaid wages from June 26, 2015 through Dec. 3, 2017. The Office launched its investigation after a former employee submitted a complaint in February 2018. The complaint also alleges Harvard Shop managers retaliated against employees who asked for the wages they were owed.

The Harvard Shop, HSA General Manager James McKellar, and the Attorney General’s Office settled the complaint with the state in November.

The Attorney General’s Office required the Harvard Shop to pay $5,600 in civil penalties — $4,600 for failing to comply with a state law requiring businesses to pay employees in a timely manner, and $1,000 for failing to have an earned sick time policy. The state agency required the Harvard Shop to verify nearly three years of payroll records and pay back 274 employees. Several of them received checks for more than $1,000, many others for more than $100.

McKellar — one of the organization’s “permanent” staff members — wrote in an emailed statement that the Harvard Shop and HSA “unknowingly” failed to pay employees the correct amount.

“In this case, we unknowingly did make a mistake in how we were paying our students for Sunday and holiday pay,” McKellar wrote. “When we learned of our mistake, we voluntarily corrected the issue immediately to the satisfaction of the Massachusetts Attorney General and worked with our legal counsel to enact new employee policies to ensure that we are in compliance with the law.”

HSA, which bills itself as the largest student-run company in the world, comprises 12 businesses, including The Harvard Shop, which sells Harvard merchandise and class rings at its three Cambridge locations and its online store. Each year, an undergraduate serves as the Harvard Shop’s managing director, supervising a staff of students.

Though students oversee HSA’s day-to-day operations, alumni and University employees sit on its board of directors alongside students. Its current board includes College admissions officer and Assistant Director of Financial Aid for Student Employment Matthew J. Akre; Faculty of Arts and Sciences Associate Dean Robert G. Doyle; Computer Science Professor David J. Malan ’99; and Office of Career, Research, and International Opportunities Director Robin E. Mount.

Dastjerdi said none of the company’s upper management from 2015 to 2017 — including the president, vice president, permanent employees, and board members, many of whom are business professionals — were aware the Sunday pay or sick leave law existed until they received the complaint.

Several former Harvard Shop employees dispute Dastjerdi’s account, arguing that HSA managers knew about the relevant laws well before the Attorney General’s investigation and were aware that internal pay records were not accurate.

This account is based on internal documents from both HSA and the Attorney General’s Office, as well as interviews with 10 current and former HSA employees.

Former Harvard Shop Managing Directors Leo A. Fondriest ’19 and Anthony J. W. Kenny ’20 did not respond to a request for comment about the investigation. Former Personnel Manager Megan H. Howard ’21, who some former managers said participated in an internal payroll audit requested by the Attorney General’s Office, also did not respond to a request for comment. Current HSA President James N. Swingos IV ’20 declined to comment, referring to McKellar’s statement.

Harvard College spokesperson Aaron M. Goldman declined to comment on whether the College was aware of the investigation and whether it became involved. He referred questions on the matter to McKellar.

‘HUNDREDS’ OF EMPLOYEES

The Attorney General’s Office received an anonymous complaint from a former employee of the Harvard Shop “on or about” March 29, 2018, according to documents obtained by The Crimson. That employee alleged the Harvard Shop failed to pay employees wages they were owed, neglected Sunday and holiday pay laws, did not make employees’ personnel records available to them, and retaliated against employees.

“Sunday pay not provided to all hourly employees and/or they did not back pay everyone it was owed to for the 3 year statutory period,” the complainant wrote.

The Office ultimately issued the Harvard Shop two citations — one for the failure to pay wages, the other for the lack of an earned sick time policy.

The complaint sparked an eight-month investigation run by the Attorney General’s Office’s Fair Labor Division. The office obtained copies of payroll information in April 2018, which revealed the Harvard Shop’s failure to pay Sunday premiums to its employees for three years.

Massachusetts “Blue Laws” previously required certain retail businesses to pay their employees 1.5 times their hourly wages for working on Sundays and certain holidays. The law currently requires these businesses to pay slightly less — 1.4 times the normal rate — in a change that went into effect at the beginning of this year. Massachusetts’ earned sick time law entitles hourly employees to sick leave hours that accrue over time.

The Attorney General’s Office found that the Harvard Shop’s managers were made aware of the payment discrepancies in December 2017 and adjusted their Sunday pay and earned sick time policies immediately. Prior to December 2017, the Harvard Shop did not pay its employees time-and-a-half when they worked Sunday shifts and did not grant its employees earned sick leave hours.

In February 2018 — before the Attorney General’s Office initiated its investigation — the Harvard Shop paid all “active” employees restitution for unpaid Sunday premiums.

HSA appears to have made at least two rounds of back payments — one in February to “active” employees, and then one in June following an internal audit that reviewed three years of Harvard Shop payroll records — according to documents obtained by The Crimson.

The 274 employees who were owed back pay received paychecks from the Harvard Shop ranging in value from $6.18 to $1,647.82. The Harvard Shop owed 17 employees more than $500 in restitution each.

Some employees were never made aware of the investigation. Jacob P. Olson ’19, who worked at the Harvard Shop sporadically for three years, said he was unaware shifts on different days of the week had different pay rates. D. Brady Stevens ’19, who has worked at the Harvard Shop for four years and said he often works Sunday shifts, said he thought the extra Sunday pay was an internal HSA policy that began last year.

The Attorney General’s Office and the Harvard Shop came to a settlement at the end of November 2018, in which the business attested to its payment of restitution and compliance with Massachusetts labor law. McKellar and Massachusetts Assistant Attorney General Lisa C. Price signed the settlement agreement, bringing the investigation to a close.

“The AG’s Office works hard to make sure employers fully comply with state wage and hour laws,” Attorney General’s Office spokesperson Margaret Quackenbush wrote in an emailed statement. “We are pleased that hundreds of current and former employees will receive restitution through this settlement, and that the business has come into compliance.”

‘WHAT IN THE WORLD IS THIS LAW?’

Detailed in the complaint were issues with the Harvard Shop’s payroll system stretching well beyond the Sunday pay and sick time violations.

The complainant alleged that Harvard Shop managers did not make pay stubs accessible to employees, altered personnel records if they believed employees were not “working hard enough,” and adjusted hours to fit the shop's weekly budgets.

Employees asking for Sunday back pay faced a “retaliatory reduction in hours,” according to the complaint. The document also notes “text proof” exists showing that employees were asked to “keep quiet” about the issue because it was “too much work” to provide all employees with Sunday back pay.

Neither the two citations issued by the Attorney General’s Office nor the settlement agreement address the workplace retaliation mentioned in the original complaint.

Dastjerdi denied the allegation that Harvard Shop managers retaliated against employees. He said some lower-level managers asked HSA’s upper management if they could reduce employees’ hours or pay, but they were always told they could not do so.

“Legally, there's no way of doing that. Performance incentives can only be positive, right?” Dastjerdi said. “Now, have some hourly employee managers ever been like, ‘Is this something I can do?’ Yes. And we always say no. Because, you know, your job as an hourly employee manager is to figure out how to make all of the people on your team all-stars.”

Alexander L. Trobough ’20, who served as the Harvard Shop’s personnel manager for most of 2017, said HSA managers knew about the Sunday pay law well before December 2017. He said he informed Dastjerdi — then HSA’s vice president — in the summer of that year about a potential issue with Sunday and overtime pay.

“It was something that I had asked about midway through my year that was like, ‘Oh, I'm responsible for paying these people. I've read these laws. It seems like we should be doing something differently,’” Trobough said. “And the response [from Dastjerdi] was kind of that in an accounting sense, it would be too difficult to account for, probably don't want to do that.”

Dastjerdi denied Trobough’s and the complainant’s allegations. He said student managers and board members were surprised to hear about the Sunday pay law.

“Our board unanimously was like, ‘What in the world is this law?’ And we were like, ‘Yeah, we didn't know either,’” he said. “It's a law passed in 2015, it’s not like it's been on the books for a decade.”

The complainant also alleged that employees went months without receiving paychecks and cited a specific incident when a payroll employee “on vacation” delayed payment to hourly workers for six weeks.

Erin T. Wong ’21, who has worked at the Harvard Shop since fall 2017, said she and at least one other employee often experienced delays in receiving paychecks.

“It was delayed for a while after I started working, and the same thing happened to my friend, who was working for a while before she actually got paid. A lot of that was actually like nagging my boss being like, ‘Hey can you check if I've been paid? Because like I don't think that's right. I don't think I've been paid like the correct amount,’” Wong said.

Wong added that she keeps a personal log of her hours in order to make sure Harvard Shop managers pay her the correct amount.

“There was definitely one instance where I was like really paid wrong, like underpaid — and that was like even this year — so I always try and keep track of my hours outside of the online scheduling platform,” she said.

Dastjerdi acknowledged that an internal HSA audit found payment delays similar to those described by Wong and the complainant. He said employees often forgot to file paperwork in a timely manner, and that the Harvard Shop allowed employees to work before they had submitted the necessary documents.

“That's illegal, and we realized that was happening way more than we felt comfortable with,” he said.

‘A HUGE WAKE-UP CALL’

Months after HSA made its first round of back payments to “active” employees, the company informed current and former employees that an “internal review” had determined that some workers were still owed additional wage payments, according to a June 26, 2018 email obtained by The Crimson.

“We recently completed an internal review of our payroll records and determined that you were not compensated all amounts owed while you worked at The Harvard Shop, and we made a payment to you on February 9, 2018,” the email reads. “In addition to that initial payment, we went back three years, and determined that you were owed an additional amount. The Harvard Shop will process a payment to you for all outstanding amounts using your direct deposit information currently on file. You should be expecting the payment shortly.”

The email appears to refer to, but not directly reference, the second round of payments made as a result of the Attorney General’s investigation.

Dastjerdi, McKellar, and the Attorney General’s Office all said the Harvard Shop has brought its policies fully into compliance with Massachusetts labor law.

Dastjerdi added that the complaint and subsequent investigation prompted a review of employment practices throughout HSA.

“Besides just complying with the AG's report, we were like, ‘Well, this is a huge wake-up call for our company,’” he said. “‘We really need to become a little bit more rigorous about labor regulation.’”

Under Dastjerdi’s tenure as president, the organization transitioned to using a new payroll software and created new policies for recording accrued sick time. He said HSA has since standardized wages and policies across its 12 constituent businesses.

Dastjerdi also pointed to the creation of a new student position — the Chief People Officer — who works with hourly employees on issues of labor and wage policies.

He added that he thinks the complaint is a “small” deal within the broader context of HSA’s mission.

“I totally get how, you know, from your perspective, this seems like a very large deal. And it is for us too, because being not in compliance with the law is bad,” he said. “But to kind of come to terms between what I'm saying about our deep respect for paying students and this complaint is that on a kind of order of magnitude, it's quite small.”

—Staff writer Shera S. Avi-Yonah can be reached at shera.avi-yonah@thecrimson.com. Follow her on Twitter at @saviyonah.

—Staff writer Delano R. Franklin can be reached at delano.franklin@thecrimson.com. Follow him on Twitter at @delanofranklin_.