American Made Bags (asi/35556), a promotional products supplier based in Akron, OH, engaged in illegal pay practices and has been ordered by a federal judge to pay 48 employees $189,756, which includes $94,893 in back wages and about an equal amount in damages, authorities announced March 8.

The ruling from U.S. Circuit Court Judge Benita Y. Pearson of the Northern District of Ohio, Eastern Division came following two investigations by the U.S. Department of Labor’s Wage and Hour Division.

The first investigation determined that American Made Bags misclassified employees as independent contractors. The company also failed to pay the misclassified laborers and other employees accurate overtime pay at time-and-one-half a worker’s hourly pay rate. In addition, American Made Bags neglected to keep required wage records, authorities said.

After a federal complaint was filed in April 2019, American Made Bags agreed to pay $47,457 in back wages to 38 employees. Still, the company didn’t complete the agreed payments, investigators said.

“After our first investigation at American Made Bags LLC, the company agreed to change their pay practices and comply with the law,” said Dieera Fitzgerald, acting district director of the Wage and Hour Division in Columbus, OH. “We discovered, however, they failed to live up to that agreement, stopped paying overtime and once again shortchanged their workers.”

Indeed, a second investigation determined that American Made bags was once more in violation of overtime regulations, according to prosecutors. Company Owner Thomas W. Armour, II also initially misrepresented pay practices to investigators, authorities said. The alleged obfuscation didn’t work, however, and the second investigation revealed that American Made Bags owed 24 employees $46,797, investigators asserted.

Ultimately, Pearson issued her ruling on backpay and damages against American Made Bags and Armour on Feb. 15, 2022, for what investigators described as repeated violations of the Fair Labor Standards Act.

“Employers must ensure they understand wage laws and fully comply with them,” Fitzgerald said. “The Wage and Hour Division will not tolerate disregard for the law and attempts to cheat workers out of their hard-earned wages.”

A federal complaint details that Armour was the sole owner of the company and often made important operational decisions, including setting corporate policies on human resources and payroll, hiring decisions, and price setting.

Most of Armour’s workers were sewers/seamstresses, printers/screen printers, helpers/floor hands, or designers/artists, many of whom had worked for the company for extended periods of time, lasting multiple years or even decades, a complaint said.

American Made Bags’ website says the company is a union shop that’s part of the United Food and Commercial Workers Local 211. The company sells an array of bags, from totes and messengers to backpacks and duffels. It customizes those products through embroidery, screen printing and direct to garment digital printing.

Armour told ASI Media that he believes the company has correctly classified workers as independent contractors.

Armour emphasized that the people who work at American Made Bags are classified as independent contractors, in significant part, because they are free to come and go on their own schedules – unlike employees, he asserted, which must follow set company schedules, rules/regulations and more.

“There are no start times and end times,” Armour said. “Our facility is open seven days a week, 24 hours a day and every person who chooses to come and work on a project is free to do so any time they choose to, or they can choose to work from home if that works best for them.”

Armour said that since the “people we work with” are classified as independent contractors, the company does not pay overtime because among “many other qualifying determinants as an independent contractor, we have never requested anyone to work overtime.”

Armour noted that workers at American Made Bags typically earn $700 to $1,300 per week. He said that workers he classifies as contractors have worked at American Made Bags “for decades” due to the flexibility and desirable pay rate.

He said the government case against American Made Bags may be based on a “misunderstanding of how we operate…Since the early 1990s our philosophy and goal has been to provide a company structure – kind of non-structured – that caters to people and their ever-changing and stressful lives. We wanted to create an environment that is supportive and that allows people that want work to determine what they feel is their best way to work.