BILL NUMBER: AB 633	CHAPTERED
	BILL TEXT

	CHAPTER   554
	FILED WITH SECRETARY OF STATE   SEPTEMBER 29, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 28, 1999
	PASSED THE SENATE   SEPTEMBER 9, 1999
	PASSED THE ASSEMBLY   SEPTEMBER 9, 1999
	AMENDED IN SENATE   SEPTEMBER 8, 1999
	AMENDED IN SENATE   SEPTEMBER 3, 1999
	AMENDED IN SENATE   JUNE 24, 1999
	AMENDED IN ASSEMBLY   JUNE 1, 1999
	AMENDED IN ASSEMBLY   MARCH 25, 1999

INTRODUCED BY   Assembly Member Steinberg
   (Principal coauthor:  Senator Hayden)

                        FEBRUARY 19, 1999

   An act to amend Sections 2671, 2675, 2675.5, 2676, 2677, and 2680
of, and to add Sections 2673.1, and 2684 to, the Labor Code, relating
to labor, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 633, Steinberg.  Labor:  garment manufacturing.
   Existing law requires every person engaged in the business of
garment manufacturing, as defined, to register with the Labor
Commissioner and to pay an initial registration fee of $150 and an
annual renewal fee of $100. Existing law imposes certain other
requirements on garment manufacturers, and provides for
administration and enforcement of the garment manufacturing
provisions by the Labor Commissioner.
   This bill would substantially revise the existing law on state
regulation of garment manufacturing.  The bill would revise the
definition of garment manufacturing to authorize the Department of
Industrial Relations to adopt regulations to include additional
operations and practices in the apparel industry that are consistent
with the garment manufacturing registration provisions.  The bill
would also authorize the department to adopt and amend regulations to
clarify and refine that statutory definition.  The bill would add a
new definition of "contractor" and revise the definition of "person."
  The bill would revise the existing law for setting the registration
and renewal fees for persons in garment manufacturing to require the
fees to be set in the aggregate to recover costs of administration
of the law and to be based on an applicant's annual volume, but to be
not less than $250 nor more than $1,000, in the case of a
contractor, or $2,500, in the case of other registrants.
   Existing law requires the commissioner to deposit $25 of each
registrant's annual registration fee into a separate account and
requires that the funds in the separate account be disbursed only to
persons damaged by a registrant where damages exceed the limits of a
registrant's bond.
   This bill would increase the amount of each registrant's annual
registration fee deposited into the separate account to $75, thereby
making an appropriation.  The bill would revise these provisions to
authorize the commissioner to disburse the funds to persons damaged
by failure of a garment manufacturer, jobber, contractor, or
subcontractor to pay wages or benefits. The bill would provide that a
person engaged in garment manufacturing who contracts with an
unregistered or unbonded person for garment manufacturing shall be
deemed an employer of the contractor's employees and shall be jointly
liable with the contractor for the payment of wages to the
contractor's employees, and would specify the process by which this
liability may be enforced.
   Nothing in existing law makes garment manufacturers liable for
guaranteeing payment of wages to employees of their contractors.
   This bill would impose that liability to the extent of
requirements for payment of the minimum wage and overtime
compensation.  The bill would prescribe a claims procedure by which
an aggrieved employee may enforce a claim for unpaid wages against
the contractor and the garment manufacturer contracting with the
contractor.  The bill would require the Labor Commissioner to
investigate these claims, hold meet-and-confer conferences and
hearings, and issue decisions and awards, as specified.  The bill
would also authorize the Labor Commissioner to enforce this guarantee
in the same manner as proceeding against the employer, with or
without a complaint being filed, subject to the procedures specified
in the bill.  The bill would authorize the Labor Commissioner to
revoke the registration of any garment manufacturer that fails to pay
a wage award issued pursuant to the bill.  The bill would make the
successor of a garment manufacturer primarily engaged in sewing or
assembly of garments for other persons, and that owes wages, also
liable for payment of those wages under specified circumstances, but
this provision would not apply to the wage guarantee obligation
established by the bill.  The bill would make conforming related
changes.
   Existing law authorizes the Division of Labor Standards
Enforcement of the Department of Industrial Relations to confiscate
any garment or wearing apparel assembled or partially assembled by a
person who has not complied with the garment manufacturing
registration requirements and requires the division to notify the
manufacturer and contractor of the removal and the location of the
confiscated goods.
   This bill would, with a specified exception, authorize the
division to confiscate the means of production, including equipment
and property, from unregistered garment manufacturers if the garment
manufacturer is a contractor that has been subject to a previous
confiscation within the prior 5 years. The bill would require the
proceeds of sales of the equipment or property to be deposited into a
Back Wages and Taxes Account, which the bill would create in the
General Fund, and would authorize the Labor Commissioner, upon
appropriation, to use moneys in the account to pay back wages owed to
garment workers and taxes.
   Existing law does not make the successor, to an employer primarily
engaged in sewing or assembly of garments for other persons engaged
in the business of garment manufacturing, liable for unpaid wages
owed to the predecessor's employees.
   This bill would impose that liability under prescribed conditions.

   Appropriation:  yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 2671 of the Labor Code is amended to read:
   2671.  As used in this part:
   (a) "Person" means any individual, partnership, corporation,
limited liability company, or association, and includes, but is not
limited to, employers, manufacturers, jobbers, wholesalers,
contractors, subcontractors, and any other person or entity engaged
in the business of garment manufacturing.
   "Person" does not include any person who manufactures garments by
himself or herself, without the assistance of a contractor, employee,
or others; any person who engages solely in that part of the
business engaged solely in cleaning, alteration, or tailoring; any
person who engages in the activities herein regulated as an employee
with wages as his or her sole compensation; or any person as provided
by regulation.
   (b) "Garment manufacturing" means sewing, cutting, making,
processing, repairing, finishing, assembling, or otherwise preparing
any garment or any article of wearing apparel or accessories designed
or intended to be worn by any individual, including, but not limited
to, clothing, hats, gloves, handbags, hosiery, ties, scarfs, and
belts, for sale or resale by any person or any persons contracting to
have those operations performed and other operations and practices
in the apparel industry as may be identified in regulations of the
Department of Industrial Relations consistent with the purposes of
this part. The Department of Industrial Relations shall adopt, and
may from time to time amend, regulations to clarify and refine this
definition to be consistent with current and future industry
practices, but the regulations shall not limit the scope of garment
manufacturing, as defined in this subdivision.
   (c) "Commissioner" means the Labor Commissioner.
   (d) "Contractor" means any person who, with the assistance of
employees or others, is primarily engaged in sewing, cutting, making,
processing, repairing, finishing, assembling, or otherwise preparing
any garment or any article of wearing apparel or accessories
designed or intended to be worn by any individual, including, but not
limited to, clothing, hats, gloves, handbags, hosiery, ties, scarfs,
and belts, for another person.  "Contractor" includes a
subcontractor that is primarily engaged in those operations.
  SEC. 2.  Section 2673.1 is added to the Labor Code, to read:
   2673.1.  (a) To ensure that employees are paid for all hours
worked, a person engaged in garment manufacturing, as defined in
Section 2671, who contracts with another person for the performance
of garment manufacturing operations shall guarantee payment of the
applicable minimum wage and overtime compensation, as required by
law, that are due from that other person to its employees that
perform those operations.
   (b) Where the work of two or more persons is being performed at
the same worksite during the same payroll period, the liability of
each person under this guarantee shall be limited to his or her
proportionate share, as determined by the Labor Commissioner pursuant
to paragraph (3) or (4) of subdivision (d).
   (c) Employees may enforce this guarantee solely by filing a claim
with the Labor Commissioner against the contractor and the guarantor
or guarantors, if known, to recover unpaid wages.  Guarantors whose
identity or existence is unknown at the time the claim is filed may
be added to the claim pursuant to paragraph (2) of subdivision (d).
   (d) Claims filed with the Labor Commissioner for payment of wages
pursuant to subdivision (c) shall be subject to the following
procedure:
   (1) Within 10 business days of receiving a claim pursuant
subdivision (c), the Labor Commissioner shall give written notice to
the employee, the contractor, and persons that may be guarantors of
the nature of the claim and the date of the meet-and-confer
conference on the claim.  Within 10 business days of receiving the
claim, the Labor Commissioner shall issue a subpoena duces tecum
requiring the contractor to submit to the Labor Commissioner those
books and records as may be necessary to investigate the claim and
determine the identity of any potential guarantors for the payment of
the wage claim, including, but not limited to, invoices for work
performed for any and all persons during the period included in the
claim.  Compliance with such a request for books and records, within
10 days of the mailing of the notice, shall be a condition of
continued registration pursuant to Section 2675.  At the request of
any party, the Labor Commissioner shall provide to that party copies
of all books and records received by the Labor Commissioner in
conducting its investigation.
   (2) Within 30 days of receiving a claim pursuant to subdivision
(c), the Labor Commissioner shall send a notice of the claim and of
the meet-and-confer conference to any other persons who may be
guarantors with respect to the claim.
   (3) Within 60 days of receiving a claim pursuant to subdivision
(c), the Labor Commissioner shall hold a meet-and-confer conference
with the employee, the contractor, and all known potential guarantors
to attempt to resolve the claim.  Prior to the meet-and-confer
conference, the Labor Commissioner shall conduct and complete an
investigation of the claim, shall make a finding and assessment of
the amount of wages owed, and shall conduct an investigation and
determine each guarantor's proportionate share of liability.  The
investigation shall include, but not be limited to, interviewing the
employee and his or her witnesses and making a finding and assessment
of back wages due, if any, to the employee.  An employee's claim of
hours worked and back wages due shall be presumed valid and shall be
the Labor Commissioner's assessment, unless the contractor provides
specific, compelling, and reliable written evidence to the contrary
and is able to produce records pursuant to subdivision (d) of Section
1174 or Section 2673 that are accurate and contemporaneous, itemized
wage deduction statements pursuant to Section 226, bona fide
complete and accurate payroll records, and evidence of the precise
hours worked by the employee for each pay period during the period of
the claim.  If the Labor Commissioner finds falsification by the
contractor of payroll records submitted for any pay period of the
claim, any other payroll records submitted by the contractor shall be
presumed false and disregarded.
   The Labor Commissioner shall present his or her findings and
assessment of the amount of wages owed and each guarantor's
proportionate share thereof to the parties at the meet-and-confer
conference and shall make a demand for payment of the amount of the
assessment.  If no resolution is reached, the Labor Commissioner
shall, at the meet-and-confer conference, set the matter for hearing
pursuant to paragraph (4).  The Labor Commissioner's assessment,
pursuant to this paragraph, of the amount of back wages due is solely
for purposes of the meet-and-confer conference and shall not be
admissible or be given any weight in the hearing conducted pursuant
to paragraph (4).  If the Labor Commissioner has not identified any
potential guarantors after investigation and the matter is not
resolved at the conclusion of the meet-and-confer conference, the
Commissioner shall proceed against the contractor pursuant to Section
98.
   (4) The hearing shall commence within 30 days of, and shall be
completed within 45 days of, the date of the meet-and-confer
conference.  The hearing may be bifurcated, addressing first the
question of liability of the contractor and the guarantor or
guarantors, and immediately thereafter the proportionate
responsibility of the guarantors.  The Labor Commissioner shall
present his or her proposed findings of the guarantor's proportionate
share at the hearing.  Any party may present evidence at the hearing
to support or rebut the proposed findings.  Except as provided in
this paragraph, the hearing shall be held in accordance with the
procedure set forth in subdivisions (b) to (h), inclusive, of Section
98.  It is the intent of the Legislature that these hearings be
conducted in an informal setting preserving the rights of the
parties.
   (5) Within 15 days of the completion of the hearing, the Labor
Commissioner shall issue an order, decision, or award with respect to
the claim and shall file the order, decision, or award in accordance
with Section 98.1.
   (e) An employee shall be entitled to recover, from the contractor,
liquidated damages in an amount equal to the wages unlawfully
withheld, as set forth in Section 1194.2, and liquidated damages in
an amount equal to unpaid overtime compensation due.  A guarantor
under subdivision (a) shall be liable for its proportionate share of
those liquidated damages if the guarantor has acted in bad faith,
including, but not limited to, failure to pay or unreasonably
delaying payment to its contractor, unreasonably reducing payment to
its contractor where it is established that the guarantor knew or
reasonably should have known that the price set for the work was
insufficient to cover the minimum wage and overtime pay owed by the
contractor, asserting frivolous defenses, or unreasonably delaying or
impeding the Labor Commissioner's investigation of the claim.
   (f) If either the contractor or guarantor refuses to pay the
assessment, and the employee prevails at the hearing, the party that
refuses to pay shall pay the employee's reasonable attorney's fees
and costs.  If the employee rejects the assessment of the Labor
Commissioner and prevails at the hearing, the employer shall pay the
employee's reasonable attorney's fees and costs.  The guarantor shall
be jointly and severally liable for the contractor's share of the
attorney's fees and costs awarded to an employee only if the Labor
Commissioner determines that the guarantor acted in bad faith,
including, but not limited to, failure to pay, unreasonably delaying
payment to the contractor, unreasonably reducing payment to the
contractor where it is established that the guarantor knew or
reasonably should have known that the price set for the work was
insufficient to cover the applicable minimum wage and overtime pay
owed by the contractor, asserting frivolous defenses, or unreasonably
delaying or impeding the Labor Commissioner's investigation of the
claim.
   (g) Any party shall have the right to judicial review of the
order, decision, or award of the Labor Commissioner made pursuant to
paragraph (5) of subdivision (d) as provided in Section 98.2.  As a
condition precedent to filing an appeal, the contractor or the
guarantor, whichever appeals, shall post a bond with the Commissioner
in an amount equal to one and one-half times the amount of the
award.  No bond shall be required of an employee filing an appeal
pursuant to Section 98.2.  At the employee's request, the Labor
Commissioner shall represent the employee in the judicial review as
provided in Section 98.4.
   (h) If the contractor or guarantor appeals the order, decision, or
award of the Labor Commissioner and the employee prevails on appeal,
the court shall order the contractor or guarantor, as the case may
be, to pay the reasonable attorney's fees and costs of the employee
incurred in pursuing his or her claim.  If the employee appeals the
order, decision, or award of the Labor Commissioner and the
contractor or guarantor prevails on appeal, the court may order the
employee to pay the reasonable attorney's fees and costs of the
contractor employer or guarantor only if the court determines that
the employee acted in bad faith in bringing the claim.
   (i) The rights and remedies provided by this section do not
preclude an employee from pursuing any other rights and remedies
under any other provision of state or federal law.  If a finding and
assessment is not issued as specified and within the time limits in
paragraph (3) of subdivision (d), the employee may bring a civil
action for the recovery of unpaid wages pursuant to any other rights
and remedies under any other provision of the laws of this state
unless, prior to the employee bringing the civil action, the
guarantor files a petition for writ of mandate within 10 days of the
date the assessment should have been issued.  If findings and
assessments are not made, or a hearing is not commenced or an order,
decision, or award is not issued within the time limits specified in
paragraphs (4) and (5) of subdivision (d), any party may file a
petition for writ of mandate to compel the Labor Commissioner to
issue findings and assessments, commence the hearing, or issue the
order, decision, or award.  All time requirements specified in this
section shall be mandatory and shall be enforceable by a writ of
mandate.
   (j) The Labor Commissioner may enforce the wage guarantee
described in this section in the same manner as a proceeding against
the contractor.  The Labor Commissioner may, with or without a
complaint being filed by an employee, conduct an investigation as to
whether all the employees of persons engaged in garment manufacturing
are being paid minimum wage or overtime compensation and, with or
without the consent of the employees affected, commence a civil
action to enforce the wage guarantee.  Prior to commencing such a
civil action and pursuant to rules of practice and procedure adopted
by the Labor Commissioner, the commissioner shall provide notice of
the investigation to each guarantor and employee, issue findings and
an assessment of the amount of wages due, hold a meet-and-confer
conference with the guarantors and employees to attempt to resolve
the matter, and provide for a hearing.
   (k) Except as expressly provided in this section, this section
shall not be deemed to create any new right to bring a civil action
of any kind for unpaid minimum wages, overtime pay, penalties, wage
assessments, attorney's fees, or costs against a registered garment
manufacturer based on its use of any contractor that is also a
registered garment manufacturer.
   (l) The payment of the wage guarantee provided in this section
shall not be used as a basis for finding that the registered garment
manufacturer making the payment is a joint employer, coemployer, or
single employer of any employees of a contractor that is also a
registered garment manufacturer.
   (m) The Labor Commissioner may, in his or her discretion, revoke
the registration under this part of any registrant that fails to pay,
on a timely basis, any wages awarded pursuant to this section, after
the award has become final.
  SEC. 3.  Section 2675 of the Labor Code is amended to read:
   2675.  (a) For purposes of enforcing this part and Sections 204,
209, 212, 221, 222, 222.5, 223, 226, 227, and 227.5, Chapter 2
(commencing with Section 300) and Article 2 (commencing with Section
400) of Chapter 3 of Part 1 of this division, Sections 1195.5, 1197,
1197.5, and 1198, Division 4 (commencing with Section 3200) and
Division 4.7 (commencing with Section 6200), every person engaged in
the business of garment manufacturing, shall register with the
commissioner.
   The commissioner shall not permit any person to register, nor
shall the commissioner allow any person to renew registration, until
all the following conditions are satisfied:
   (1) The person has executed a written application therefor in a
form prescribed by the commissioner, subscribed and sworn by the
person, and containing:
   (A) A statement by the person of all facts required by the
commissioner concerning the applicant's character, competency,
responsibility, and the manner and method by which the person
proposes to engage in the business of garment manufacturing if the
registration is issued.
   (B) The names and addresses of all persons, except bona fide
employees on stated salaries, financially interested, either as
partners, associates, or profit sharers, in the proposed business of
garment manufacturing together with the amount of their respective
interests, except that in the case of a publicly traded corporation a
listing of principal officers shall suffice.
   (2) The commissioner, after investigation, is satisfied as to the
character, competency, and responsibility of the person.
   (3) In the case of a person who has been cited and penalized
within the prior three years under this part, the person has
deposited or has on file a surety bond in the sum and form that the
commissioner deems sufficient and adequate to ensure future
compliance, not to exceed five thousand dollars ($5,000).  The bond
shall be payable to the people of California and shall be for the
benefit of any employee of a registrant damaged by the registrant's
failure to pay wages and fringe benefits, or for the benefit of any
employee of a registrant damaged by a violation of Section 2677.5.
   (4) The person has documented that a current workers' compensation
insurance policy is in effect for the employees of the person
seeking registration.
   (5) The person has paid an initial or renewal registration fee to
the commissioner.  The fee for initial registration and for each
registration renewal shall be established in an amount determined by
the Labor Commissioner to be sufficient to defray the costs of
administering this part and shall be based on the applicant's annual
volume, but shall be not less than two hundred fifty dollars ($250)
and shall be not more than one thousand dollars ($1,000) for
contractors and two thousand five hundred dollars ($2,500) for all
other registrants.
   (b) At the time a certificate of registration is originally issued
or renewed, the commissioner shall provide related and supplemental
information regarding business administration and applicable labor
laws.  This related and supplemental information, as much as
reasonably possible, shall be provided in the primary language of the
garment manufacturer.  The information shall include all subject
matter on which persons seeking registration are examined pursuant to
subdivision (c), and shall be available to persons seeking
registration prior to taking this examination.
   (c) Effective January 1, 1991, persons seeking registration under
this section for the first time, and persons seeking to renew their
registration pursuant to subdivision (f), shall comply with all of
the following requirements:
   (1) Demonstrate, by an oral or written examination, or both,
knowledge of the pertinent laws and administrative regulations
concerning garment manufacturing as the commissioner deems necessary
for the safety and protection of garment workers.
   (2) Demonstrate, by an oral or written examination, or both,
knowledge of state laws and regulations relating to occupational
safety and health which shall include, but not be limited to, the
following:
   (A) Section 3203 of Title 8 of the California Code of Regulations
(Injury Prevention Program).
   (B) Section 3220 of Title 8 of the California Code of Regulations
(Emergency Action Plan).
   (C) Section 3221 of Title 8 of the California Code of Regulations
(Fire Prevention Plan).
   (D) Section 6151 of Title 8 of the California Code of Regulations
which provides for the placement, use, maintenance, and testing of
portable fire extinguishers provided for the use of employees.
   (3) Sign a statement which provides that he or she shall do all of
the following:
   (A) Comply with those regulations specified in paragraph (2) which
establish minimum standards for securing safety in all places of
employment.
   (B) Ensure that all employees are made aware of the existence of
these regulations and any other applicable laws and are instructed in
how to implement the Injury Prevention Program, Emergency Action
Plan, and Fire Prevention Plan, specified in paragraph (2), in the
workplace.
   (C) Ensure that all employees are instructed in the use of
portable fire extinguishers.
   (D) Post the Injury Prevention Program, Emergency Action Plan, and
Fire Prevention Plan, specified in paragraph (2), in a prominent
location in the workplace.
   (d) The Division of Occupational Safety and Health shall assist
the Division of Labor Standards Enforcement in developing the
examination which shall include, but not be limited to, the state's
occupational safety and health laws specified in paragraph (2) of
subdivision (c).
   (e) The commissioner shall charge a fee to persons taking the
examinations required by subdivision (c) which is sufficient to pay
for costs incurred in administering the examinations.
   (f) A person seeking renewal of registration shall be required to
take both of the examinations, and sign the statement, specified in
subdivision (c).  However, once a renewal of registration has been
granted based on these examinations, subsequent examinations shall
only be required at the discretion of the commissioner if, in the
preceding year, the registrant has been found to be in violation of
subdivision (a) or any of the sections enumerated in that
subdivision.
   (g) Proof of registration shall be by an official Division of
Labor Standards Enforcement registration form.  Every person, as set
forth in Section 2671, shall post the registration form where it may
be read by employees during the workday.
   (h) At least 90 days prior to the expiration of each registrant's
registration, the commissioner shall mail a renewal notice to the
last known address of the registrant.  The notice shall include all
necessary application forms and complete instructions for
registration renewal.  However, omission of the commissioner to
provide notice in accordance with this subdivision shall not excuse a
registrant from making timely application for renewal of
registration, shall not be a defense in any action or proceeding
involving failure to renew registration, and shall not subject the
commissioner to any legal liability under this section.
  SEC. 4.  Section 2675.5 of the Labor Code is amended to read:
   2675.5.  (a) The commissioner shall deposit seventy-five dollars
($75) of each registrant's annual registration fee, required pursuant
to paragraph (5) of subdivision (a) of Section 2675, into one
separate account.  Funds from the separate account shall be disbursed
by the commissioner only to persons determined by the commissioner
to have been damaged by the failure to pay wages and benefits by any
garment manufacturer, jobber, contractor, or subcontractor after
exhausting a bond, if any, to ensure the payment of wages and
benefits.  Any disbursed funds subsequently recovered by the
commissioner shall be returned to the separate account.
   (b) The remainder of each registrant's annual registration fee not
deposited into the special account pursuant to subdivision (a) shall
be applied to costs incurred by the commissioner in administering
the provisions of Section 2675 and this section.
  SEC. 5.  Section 2677 of the Labor Code is amended to read:
   2677.  (a) Any person engaged in the business of garment
manufacturing who contracts with any other person similarly engaged
who has not registered with the commissioner or does not have a valid
bond on file with the commissioner, as required by Section 2675,
shall be deemed an employer, and shall be jointly liable with such
other person for any violation of Section 2675 and the sections
enumerated in that section.
   (b) Any employee of a person or persons engaged in garment
manufacturing who are not registered as required by this part may
bring a civil action against any person deemed to be an employer
pursuant to subdivision (a) to recover any wages, damages, or
penalties to which the employee may be entitled because of a
violation by the unregistered person or persons of any provision
specified in subdivision (a) of Section 2675, or may file a claim
with the Labor Commissioner pursuant to Section 2673.1.  In any civil
action brought pursuant to this subdivision, the court shall grant a
prevailing plaintiff's reasonable attorney's fees and costs.
  SEC. 6.  Section 2680 of the Labor Code is amended to read:
   2680.  (a) Any garment or wearing apparel, assembled or partially
assembled by or on behalf of any person who has not complied with the
registration requirements of this part, may be confiscated by the
Division of Labor Standards Enforcement.  Garments and wearing
apparel confiscated pursuant to this section shall be placed in the
custody of the division, which shall be charged with the
responsibility of destroying or disposing of them pursuant to
regulations adopted under Section 2672, provided that the goods shall
not enter the mainstream of commerce and shall not be offered for
sale.  The division shall, by registered mail and telephone, give
notice of the removal and the location where the confiscated goods
are held in custody to the known manufacturer and contractor.
   (b) If the person from whom garments or wearing apparel are
confiscated pursuant to subdivision (a) was providing the confiscated
garments or wearing apparel as a contractor and has previously,
within the immediately preceding five-year period, had garments or
wearing apparel confiscated pursuant to subdivision (a), the Labor
Commissioner may, in addition to the remedies set forth in
subdivision (a), confiscate the means of production, including all
manufacturing equipment and the property where the current
unregistered garment manufacturing operations have taken place.  This
subdivision does not apply where nonregistration of the contractor
was due to delayed renewal of registration.
   (c) The proceeds from the sale of any equipment or property under
subdivision (b) shall be deposited into a single account in the
General Fund, to be known as the Back Wages and Taxes Account.  At
the Labor Commissioner's discretion, and upon appropriation by the
Legislature, funds from that account may be disbursed to pay back
wages owed to garment workers, including, but not limited to, workers
of the unregistered contractor whose violation caused the
confiscation, and for the payment of taxes.
  SEC. 7.  Section 2684 is added to the Labor Code, to read:
   2684.  (a) The Legislature finds and declares that persons who are
primarily engaged in sewing or assembly of garments for other
persons engaged in garment manufacturing frequently close down their
sewing shops to avoid paying their employees' wages and subsequently
reopen under the conditions described in subdivision (b), and are
more likely to do so than are other types of persons engaged in
garment manufacturing.
   (b) A successor to any employer that is primarily engaged in
sewing or assembly of garments for other persons engaged in the
business of garment manufacturing, as defined by subdivision (b) of
Section 2671, that owes wages to the predecessor's former employee or
employees is liable for those wages if the successor meets any of
the following                                               criteria:

   (1) Uses substantially the same facilities or work force to
produce substantially the same products for substantially the same
type of customers as the predecessor employer.
   (2) Shares in the ownership, management, control of labor
relations, or interrelations of business operations with the
predecessor employer.
   (3) Has in its employ in a managerial capacity any person who
directly or indirectly controlled the wages, hours, or working
conditions of the affected employees of the predecessor employer.
   (4) Is an immediate family member of any owner, partner, officer,
or director of the predecessor employer or of any person who had a
financial interest in the predecessor employer.
   This section does not impose liability upon a successor for the
guarantee of unpaid minimum wages and overtime compensation set forth
in subdivision (a) or (b) of Section 2673.1.
  SEC. 8.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because the
only costs that may be incurred by a local agency or school district
will be incurred because this act creates a new crime or infraction,
eliminates a crime or infraction, or changes the penalty for a crime
or infraction, within the meaning of Section 17556 of the Government
Code, or changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.