As Shreve, Crump & Low tries to rebuild its business after years of financial struggles, the historic Boston jeweler is facing a federal investigation over accusations of wage law violations.
The company allegedly failed to pay employees overtime and reneged on promised commissions, according to six current and former workers who said they have spoken with the Department of Labor over the past three months.
The scrutiny comes in the middle of Shreve’s move from its flagship store on Boylston Street to a more modest Newbury Street location. The jeweler was hurt by an industrywide decline in luxury spending during the recession, and last year it parted ways with investor Stephen Karp, chief executive of New England Development.
Since buying the business out of bankruptcy in 2006, David Walker has attempted to stage a revival of the celebrated brand, which traces its roots to a 1796 store across from Paul Revere’s silversmith shop and was a favorite of Boston’s high society — from the Cabots to the Kennedys.
In an e-mail, Walker denied that he improperly changed the commission structure or failed to make commission payments to employees. The second-generation jeweler said he was contacted several weeks ago by the Department of Labor and has been providing the agency with requested information.
“The laws governing classifications, overtime, and exemption can be confusing but we have made good faith efforts to get it right,” Walker said.
The company, in an e-mail last week to employees that was supplied to the Globe, said it planned to change several salaried staffers to hourly workers. “This is a requirement being made by the Department of Labor,” Shreve’s vice president of operations wrote. Employees said a salary structure was used to avoid paying them overtime.
But the company’s troubles extend beyond allegations about overtime and commissions, according to the current and former employees interviewed by the Globe.
The jeweler, like many other companies, cut costs because of the economic downturn. Current and former workers said that included the elimination of disability insurance and a week of paid vacation. They also claim Walker fired staff members who complained about what they considered questionable business practices and cut older employees — including a married couple on the same day.
“It was intolerable working conditions,” said Paul Carroll, Shreve’s former security manager. Carroll, who was laid off in November, said he sat in on more than two dozen termination meetings, many of which he claimed were unjustified.
Before Walker took over, sales staff earned 1 percent commission on everything they sold. But in recent years, he required workers to sell a minimum of $50,000 worth of merchandise per month before receiving a commission and raised that during the holidays to a $150,000 minimum, according to several current and former employees. During one period, they said, he eliminated the commission payments altogether.
“Sometimes he changed it without us knowing about it. Or he enforced new structures retroactively so that we would not receive money we had already earned,” said one current worker who requested anonymity.
Walker characterized the commission structure as “very fair.”
“The minimum was never raised to $150,000,” he said.
Walker said the recession, along with the money problems he inherited when he bought the bankrupt company, forced him to reduce benefits. Layoffs of longtime workers were necessitated by the 2009 closing of a Shreve’s store in the Mall at Chestnut Hill.
Shreve’s, which had nearly 100 employees in 2005, is now much smaller, with 24 workers in its Boston store. Walker said it has shown a profit in recent months, a trend he is optimistic will continue. Shreve’s also began selling jewelry at a different location in Chestnut Hill after it closed the mall store; it has five employees there.
“We’ve enjoyed strong employee relations, creating a culture where everyone is treated fairly and paid well,” Walker said.
Karp, who along with his partners invested an undisclosed sum in Shreve’s, said he had no involvement in operations and was unaware of the federal investigation.
“It hadn’t been financially successful,” he said. “We didn’t want to keep putting more capital in the business. We were happy to get out of it.”
Walker declined to comment on Karp’s departure.
Adam Heyman, of the New York jewelry designer Oscar Heyman, said he has enjoyed a strong business relationship with Walker for two decades and has not heard any complaints about Shreve’s.
“We’ve always been an admirer of [Walker],” Heyman said. “He’s a connoisseur of jewelry, design, and style.”
Shreve’s employees said they kept working at the company despite the challenges because they believed in the brand — and had few options as the industry slumped.
David Rivard, 50, said he was laid off last spring on the same day as his 62-year-old husband.
“There was a lot of tension and unease,” he said. “But I had really hoped to work there for another 15 years and retire. I enjoyed my co-workers and the clientele immensely.”
Last spring, Walker transferred an associate to Shreve’s in Boston to report on other employees, such as who showed up late and left early, and identify people who could be fired, according to the now former worker who said he was moved to the Boston store. He requested anonymity because of the ongoing investigation. As part of the transfer, he said, he was promised a 2 percent commission on sales, plus his regular pay. Previously, he received a salary but no commission.
“That’s kind of a dark chapter in my life. I was a spy,” the former employee said. “But I found everyone was doing their job and I couldn’t give a list.”
When his paychecks did not include the new commission for the roughly $80,000 in sales he had made during that time, the former worker said, he confronted Walker and was subsequently fired.
Walker declined to comment on what he characterized as a “personnel manner.”
These days, Walker is looking forward to settling Shreve’s into a more intimate shop on Newbury Street, surrounded by other luxury retailers. The store, which opened last week, is smaller and more affordable than the old Boylston Street location, which underwent at least two multimillion-dollar renovations.
“Shreve, Crump & Low is an iconic Boston brand with a strong reputation built on a tradition of offering our customers exceptional service and merchandise,” Walker said. “We hope to remain a Boston institution for a long time.”