Really good points above, everyone, so I'll primarily just echo them. The deal with modifiers is just that WHEN they modify nouns, they should show up as close as possible to the nouns they modify. This rule exists to avoid ambiguity (or equivalently, to make the meaning of the sentence as clear as possible). Contrast it with some other rules, such as the need for a verb to agree with its subject, the requirement that a prounoun agree in number with its antecedent, or even the necessity of forming complete sentence: all these rules exist basically because they're established as standard in the grammar. Let's say I wrote any of the following:
"I goes to the store."
"The team likes their coach."
"Because I can't run that fast."
All of these sentences have blatant technical grammatical errors (subject-verb clash, pronoun-antecedent clash, and sentence fragment respectively), so we absolutely wouldn't want to say any of these things EVEN THOUGH the meanings of all three are totally clear.
But since the modifier rule is really motivated by a concern for clarity more than by anything else, there's a bit more flexibility in it. As others have said very well above, the goal is always to choose the clearest among the options that do not blatantly violate any grammatical rules -- and this is of course true not only on the GMAT, but ANYTIME in life that you're composing sentences!
I like (very much!) smackmartine's suggestion of a revision to "I know a lot of people who go to the office in white shirts," because this gets more closely at what I imagine is the intended meaning of the sentence. Here's the difference as I see it:
If you say, "I know a lot of people in white shirts who go to the office," it sounds as though "in white shirts" is some sort of permanent quality of these people, as though these people are always in white shirts and the white shirts aren't detachable from their bodies... just as you might say, "I know a lot of people with brown hair who go to the office." This is probably not what's intended.
On the other hand, if you say, "I know a lot of people who go to the office in white shirts," or alternatively, "I know a lot of people who go to the office wearing white shirts," then "in/wearing white shirts" becomes an adverbial phrase telling you how (i.e. in what fashion) the people go to the office, just as you might say "I know a lot of people who go to the office everyday." So I think this solution works best as far as logical meaning.
To sum up, this modifier issue is not one of the absolute, definite, firmly fixed grammar rules; it's a clarity concern. We place modifiers that modify nouns as close as we can to the nouns they modify, so as to avoid ambiguity as best as possible, but in some sentences their may be limits to how close they can get. If that's the case, as long as the sentence's meaning is clear, and there's no way to make it clearer, it'll be fine.
Best,
Ashley Newman-Owens
GMAT Instructor
Veritas Prep
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) wants to keep everything essential in the above sentence.
