Sarah Oliver Handbags: The Unfortunate End To The Story Of The ‘Shark Tank’ Company That Warmed Hearts

The federal Department of Labor investigated how the designer paid residents of a Mill Valley retirement home to knit her products.

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The federal Department of Labor investigated how the designer paid residents of a Mill Valley retirement home to knit her products.

Any Shark Tank fans who regularly consume reruns may have recently seen Episode 14 of Season 7 on Netflix or CNBC. That’s the installment featuring Sarah Oliver Handbags, a company run by a California designer who hired residents of a Mill Valley retirement community to perform the initial knitting on her products.

As part of her pitch, Oliver showed a video that introduced the sharks to the seniors who created the handbags. Referred to as the “Purlettes+1,” since one of the knitters was not a she but a he, they seemed more than willing to participate in the company and espoused the many benefits of remaining active and earning an income.

Each bag came with an enclosed card that held the name of the senior who crafted it. After the knit was complete, the product went through several stages before it was ready for sale. Barbara Corcoran asked how much Oliver paid the senior, Esther Cherk, who had knit the bag she was holding. The answer was $17, since each knitter was paid by the piece. Oliver said the “Resort” handbag cost a total of $47 to make, with a retail price of $225.

Lori Greiner was so moved by the pitch, she suggested all five sharks make an investment, as a way of demonstrating the importance of valuing elder individuals. But both Barbara Corcoran and Mark Cuban went out. Eventually, Oliver walked away with an on-air deal with Greiner, Kevin O’Leary, and Robert Herjavec.

On the night the program aired, Greiner and O’Leary tweeted their support for Sarah Oliver Handbags. O’Leary noted the company’s website was down because of an influx of interest after the Shark Tank pitch.

The celebrations, however, did not continue. Sarah Oliver posted to her social media accounts in the spring of 2017 that the company was selling off its remaining stock and then shutting down completely.

So what happened?

In a message shared online by the designer, she said the April 30, 2017, closure of Sarah Oliver Handbags was due to “circumstances beyond [my] control,” but invited readers to watch a mini-documentary called “A Sense of Purpose,” in order to “understand our challenges a bit more.”

The video addresses the desire for seniors to feel connected and needed in their communities and the problems of age discrimination in employment. It also reveals that Sarah Oliver received a surprise visit from the federal Department of Labor, because — according to the video — under the Fair Labor Standards Act, employers must pay an hourly wage. According to the website Workplace Fairness, under FLSA, a piece rate cannot be so low as to work out to less than minimum wage when divided over the number of hours worked.

Several of Sarah Oliver’s knitters speak on the video, including Esther Cherk, who knit the bag held by Barbara Corcoran on the Shark Tank set. According to Esther, “Someone got the wrong notion that she might have been exploiting seniors. And it’s not the case at all.”

During her pitch on Shark Tank, Oliver told the panel all of the knitters worked at different speeds. In response to the question of how much knitting one of the Purlettes could do in a day, she said they do an average of three bags in a week. In the “A Sense of Purpose” video, Daphne Campbell said the work is physically demanding and can’t be done for hours on end.

While the video only makes reference to federal regulations, a new California law might also be relevant in a case similar to that of Sarah Oliver Handbags. Under recent changes to California’s Labor Code, employers are still permitted to pay a piece rate for work. However, they must also provide compensation for rest and recovery periods.

As explained by the National Federation of Independent Business, under the California law, wages for time spent on piece work and rest and recovery periods must be calculated separately. Among other requirements, the compensation for hours spent working on the piece work must equal minimum wage. Rest and recovery periods are paid on top of this compensation, even if the piece work is paid at such a rate as to be well above the minimum wage, even if the rest and recovery periods are included. As the NFIB puts it, compared to other states, “it’s not so simple in California.”

An attorney’s analysis on Nolo of the California law says employers must pay for all the time an employee is required to be at work. They could get around this requirement and pay only the piece rate if they could successfully argue that an employee is not, in fact, an employee but an independent contractor, which is not always an easy legal argument to make.

As for Sarah Oliver Handbags, the Facebook page remains active, posting about fundraisers and other events at the Redwoods community that helped make the business a success, for at least a little while.