BILL ANALYSIS
AB 2576
Page A
Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 2576 (Nielsen) - As Amended: April 8, 2010
SUBJECT : Garment manufacturing.
SUMMARY : Exempts silk screening and embroidering from
provisions of current law regulating garment manufacturing.
EXISTING LAW :
1 Requires every person engaged in the business of garment
manufacturing to register with the Labor Commissioner (LC).
2)Defines "garment manufacturing" to mean sewing, cutting,
making, processing, repairing, finishing, assembling or
otherwise preparing any garment or related items or
contracting to have those operations performed.
3)Specifies that these provisions do not apply to any person who
manufactures garments by himself or herself without the
assistance of others.
4)Specifies that these provisions do not apply to any person who
engages solely in that part of the business engaged solely in
cleaning, alteration or tailoring.
5)Requires applicants for garment manufacturing registration to
submit an application and other documentation, take an
examination relating to state laws and regulations concerning
garment manufacturing and occupational safety and health, and
pay a registration fee as determined by the LC.
6)Contains various other provisions of law relating to the
enforcement of wage and hour laws applicable to garment
manufacturers and contractors, including joint liability in
specified circumstances and bonding requirements.
7)Provides for civil penalties for failure to comply with the
registration requirements of $100 for each affected employee
for the initial violation, $200 for each affected employee for
a second or subsequent violation, or $500 for a person that
does not employ one or more workers.
AB 2576
Page B
FISCAL EFFECT : Unknown
COMMENTS : This bill proposes to amend California law
regulating the garment manufacturing industry to exclude silk
screening and embroidering from the registration and other
requirements of the law. The author and proponents contend that
such activities do not constitute "manufacturing" of garments or
similar apparel and therefore should not be included within the
current regulatory framework.
Brief Background on Regulation of Garment Manufacturing in
California
For many decades, the garment manufacturing industry has been
reported to be one of the more problematic industries in
California with respect to minimum labor standards.
The garment industry is the largest manufacturing employer in
Los Angeles County<1>, which alone produces more than $13
billion in clothing each year<2>. However, the industry has
long been plagued by workplace abuses. For example, in 2000 the
U.S. Department of Labor found that nearly 70 percent of
garment factories in Los Angeles failed to pay even the federal
minimum wage or overtime<3>. In addition, the Division of
Occupational Safety and Health (DOSH) found health and safety
violations in almost 100 percent of factories inspected<4>.
Worker advocates and others contend that it is the very
structure of the garment industry itself that results in
substandard wages and working conditions. For example, this
industry dynamic has been described as follows:
"Retailers and manufacturers pressure contractors, who
occupy the third level of the industry, to sew garments for
-------------------------
<1> Los Angeles County Economic Development Corporation, "Los
Angeles County Profile" (April 2004).
<2> California Trade and Commerce Agency, Office of Economic
Research, "Apparel and Fashion Design" (June 2000).
<3> U.S. Department of Labor, News Release "Only One-Third of
Southern California Garment Shops in Compliance with Federal
Labor Laws." (August 25, 200).
<4> Division of Occupational Safety and Health, "Garment Survey
2000" (August 2000).
AB 2576
Page C
lower and lower prices. Competition among contractors is
fierce and many open up and shut down within a few months
to a year. Contractors, mostly immigrant entrepreneurs
with little capital and often poor knowledge of labor laws,
operate at the mercy of retailers and manufacturers, who
dictate the styles, quantities, turnaround times, and
quality of garment production, as well as the prices they
will pay for contractors to do this work. Retailers and
manufacturers use contractors to avoid direct supervision
of workers and (they hope) direct responsibility for
sweatshop conditions - while they routinely fail to pay
enough for the production of their clothes to ensure that
contractors are able to pay workers minimum wage and
overtime. Many contractors, in turn, end up operating as
sweatshops. At the very bottom of the pyramid - the
greatest in number and lowest in economic and political
power - are garment workers. They are mostly Latina and
Asian immigrant women, and they comprise the foundation of
the industry<5>."
As a result of these concerns, since 1980 California law has
required garment manufacturers to be registered by the state.
The original legislation also provided that garment
manufacturers who contract with another person engaged in such
manufacturing are jointly liable for labor violations by the
contractor if the contractor has not registered or does not have
a valid bond on file.
These registration and bonding requirements are similar to other
approaches that have been adopted in other industries that have
been deemed part of the "underground economy" in California,
including farm labor contractors and car washes.
Current garment registration requirements include the following:
Completion of an application form.
Registration fees (ranging from $250 to $1,000 for
contractors and $750 to $2,500 for manufacturers). Fees
are on a sliding scale based on gross sales receipts.
Completion of a garment manufacturing exam (accompanied
--------------------------
<5> "Reinforcing the Seams: Guaranteeing the Promise of
California's Landmark Anti-Sweatshop Law." Asian Pacific
American Legal Center of Southern California and Sweatshop Watch
(September 2005) p. 10.
AB 2576
Page D
by a $25 exam fee).
A valid workers' compensation insurance certificate
California's Landmark Anti-Sweatshop Law: AB 633 (Steinberg) of
1999
On August 2, 1995, federal and state officials raided a compound
of apartment buildings in El Monte, California (near Los
Angeles) where 72 garment workers from Thailand were held
essentially as slaves by their employer. Workers were forced to
live and work behind barbed wire and under armed guard. The
workers reported that they worked from daybreak to midnight for
about $1.60 per hour. Federal officials discovered that
workers' children were often held hostage to ensure that the
parents would not escape. Most of the workers were immigrants
who were told that they had to first repay their "debts"
incurred for being brought to this country, essentially a form
of indentured servitude.
Moreover, at the time of the raid, state officials reported that
garments found at the site included labels from some of the
largest retailers in the state.
The El Monte incident gave rise to a renewed focus on combating
sweatshops in the garment industry, which culminated with
legislation in 1999.
AB 633 (Steinberg) of 1999 made several improvements to the
prior garment manufacturing law. Prior to AB 633, garment
workers could generally only recover wages from their direct
employer (the sweatshop contractor) - not from the apparel
manufacturers or retailers themselves (unless the contractor was
unlicensed.) However, AB 633 enacted a "wage guarantee"
provision aimed at closing this loophole by making certain
manufacturers and retailers legally responsible for ensuring
that garment workers are paid properly.
In addition, AB 633 established an expedited administrative
claims process for garment worker wage claims brought before the
LC. The bill also provided for confiscation of garments in
certain cases and successor employer liability.
Recent Enforcement Activity Involving "Silk Screening" and
"Embroidery" Businesses
AB 2576
Page E
A number of "silk screening" and "embroidery" businesses in the
author's district contacted him following enforcement actions by
the LC's office in which the businesses were cited for failure
to have proper garment manufacturing registration. This issue
has also generated significant media coverage in the author's
district.
In at least one case, an individual appealed their citation by
the LC to the superior court. In March, a Colusa County
Superior Court judge ruled in favor of the employer, finding
that the embroidery work performed fell within the exemption in
current law for "alteration." It is unclear whether the LC has
appealed that ruling or whether other businesses similarly have
appealed their citations.
Such enforcement activity has not just been limited to Northern
California. For example, in February 2008, LC Angela Bradstreet
announced enforcement sweeps of 140 businesses that included
clothing manufacturers, silk screen businesses and embroidery
companies in Los Angeles, San Bernardino, San Diego and Orange
Counties. The enforcement sweeps resulted in 113 citations
totaling more than $188,000 in fines. Additionally, 36 of the
companies were cited for failure to have workers' compensation
insurance and were shut down.
Notably, LC Angela Bradstreet was quoted as stating the
following:
"Silk screening and embroidery companies need to know that
they are included in the garment industry as manufacturers,
and must comply with garment industry labor and
registration requirements<6>."
In addition, in July of 2009 the Los Angeles City Attorney filed
a lawsuit against a South Los Angeles garment factory that
employed 80 workers and specialized in "printing images onto
clothing through iron-on transfer and silk screening." Among
other things, the workers at the silk screening business were
alleged to have been required to work six days a week, sometimes
two to three consecutive shifts, and were routinely denied
legally mandated overtime wages and rest breaks. The lawsuit
also alleges hazardous and unhealthy workplace conditions
including unsanitary bathrooms without working plumbing of clean
---------------------------
<6> Department of Industrial Relations, News Release. "Labor
Commissioner Cites Southern California Garment Businesses for
Labor Violations." (February 26, 2008).
AB 2576
Page F
water. The factory was also plagued with roach and rodent
infestation and workers were exposed to harmful chemicals and
fine fabric dust. Finally, the lawsuit alleges that access to
exits was often blocked by debris, and exits were locked at
night, leaving night shift workers with no way to exit the
property in case of emergency<7>.
ARGUMENTS IN SUPPORT :
The author's office states the following in support of this
bill:
"Small businesses are the backbone of California, and the key
to pulling this state out of its current economic slump.
Government, while it does have a role ensuring that businesses
follow the law, should be encouraging businesses to grow.
However, it has come to the attention of our office that
certain businesses, namely silk-screeners and embroiderers,
have been singled out and harassed. Businesses have been
threatened with severe fines and closure on the basis that
they were not following rules they never knew existed.
The goal of [this bill] is to set up a mechanism that
deals with the enforcement of the Labor Code, in relation to
silk-screeners and embroiders, that centers around education
and guidance; not heavy-handed tactics. Small businesses that
have acted within the law should not be subject to shake-downs
and bullying tactics from our own government. This bill will
attempt to iron out many of the ambiguities in law so that
these instances will be avoided in the future."
ARGUMENTS IN OPPOSITION :
Opponents argue that the garment manufacturing statute was
enacted in response to the egregious sweatshop conditions that
were prevalent within that industry. Among other things, the
law requires garment manufacturers to register and post a bond,
to ease enforcement efforts and ensure that workers who are
cheated out of wages have some opportunity to collect.
This bill would exempt silk screeners and embroiderers from
---------------------------
<7> Office of City Attorney Carmen A. Trutanich, News Release.
"L.A. City Attorney Trutanich Files Civil Lawsuit Against South
L.A. Sweatshop." (July 6, 2009).
AB 2576
Page G
these requirements. Opponents contend that such an exemption
might make sense if these parts of the industry lacked the types
of abuses that prompted the garment legislation. Unfortunately,
there are pending cases against silk screening contractors for
unpaid wages, missed rest and meal breaks, unsafe conditions,
blocked fire exits, and other similar violations. Embroidery
shops have a history of questionable labor practices including
relying on child labor, using the piece-rate system and
requiring workers to take sewing home in the evenings.
Opponents argue that these are exactly the types of illegal
practices that gave rise to the garment manufacturing law.
While every industry has responsible employers, the garment
industry has been plagued by sweatshop conditions that make
additional worker protections essential.
REGISTERED SUPPORT / OPPOSITION :
Support
PrintMojo
Opposition
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation, AFL-CIO
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
UNITE HERE!
United Food and Commercial Workers Union, Western States Council
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091