Got a chance to check this issue out. First, it's a long hair from Outdoor Retreat, not City Living, paired with the slit dress from CL as mentioned in the report. And yes, it does clip at the shoulders. Attaching a screenshot showing the evidence in my CAS as well.
This has always been a pretty common issue, I think with long hair, because I can remember this sort of thing happening to me in Sims 3. You can see the same issue with long hairstyles and hooded sweatshirts, except the hair clips the hood in the back then.
If the hair didn't clip, you'd likely end up with it floating oddly away from the chest of the Sim. It has to do with weights and the mesh, I think. Someone who creates custom content hair could probably explain better than me what's going on, but I don't think there's really any good solution to a problem like this.
