BILL ANALYSIS �
AB 302
Page A
Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Sandre Swanson, Chair
AB 302 (Garrick) - As Amended: April 27, 2011
SUBJECT : Garment manufacturing: embroidery.
SUMMARY : Exempts specified activity from provisions of current
law regulating garment manufacturing. Specifically, this bill
provides that the law does not apply to a person who, by any
means or method, engages solely in the alteration of the
appearance of garments previously shipped by a garment
manufacturer as ready-to-wear apparel.
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
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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.
FISCAL EFFECT : Unknown
COMMENTS : This bill proposes to amend California law
regulating the garment manufacturing industry to exclude
specified types of work from the registration and other
requirements of the law.
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
-------------------------
<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).
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occupy the third level of the industry, to sew garments for
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.
--------------------------
<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.
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Completion of a garment manufacturing exam (accompanied
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.
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Recent Enforcement Activity Involving "Silk Screening" and
"Embroidery" Businesses
A number of "silk screening" and "embroidery" businesses have
been cited by the LC in recent years for failure to have proper
garment manufacturing registration.
In at least one case, an individual appealed their citation by
the LC to the superior court. In April 2010, 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." Specifically, the court stated
the following:
"A shirt is a shirt is a shirt. If a garment is suitable
for its ostensible purpose without additional work then it
is 'finished' under any reasonable interpretation of the
statute. Any further work performed on the garment after
its accession to ready-to-wear status is merely alteration?
In the case at hand, �the employer] receives garments that
are indisputable ready-to-wear, i.e. suitable for their
ostensible purpose. The fact that �the employer] then
embellishes those garments with appliques and heat
transferred logos is merely alteration and does not divest
those vestments of their character as finished goods any
more than adding pin-stripping to a new vehicle would do in
that setting."
Such enforcement activity has not just been limited to Northern
California. For example, in February 2008, then-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
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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, then-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
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:
"Under current law, small business owners, often family-run,
which embroider on finished garments, such as letterman
jackets and sweatshirts, are forced to register with state as
a 'garment manufacturer,' pay a registration fee and post a
bond. That fee can be up to $2,500.
--------------------------
<6> Department of Industrial Relations, News Release. "Labor
Commissioner Cites Southern California Garment Businesses for
Labor Violations." (February 26, 2008).
<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).
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This bill will create an exemption for?businesses?that
embroider on already finished clothing products from
registering as garment manufacturers with the State of
California.
Small businesses are struggling in this state every day and
those struggles lead them to flee for more attractive business
climates. We need to ensure that impediments to businesses
surviving in our hostile business climate are eliminated to
retain these businesses and encourage employee hiring."
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 certain embroiderers and others from
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,
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.
PRIOR LEGISLATION :
AB 2567 (Nielsen) from 2010 would have exempted silk screening
and embroidery from the requirements of the garment
manufacturing law. AB 2567 was referred to the Assembly
Committee on Labor and Employment, but was not heard at the
author's request.
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REGISTERED SUPPORT / OPPOSITION :
Support
Access Uniforms (Burlingame, CA)
Cotton Shoppe
Double Stitch Embroidery and Gifts (Manteca, CA)
Numerous Individuals
Pacific Screen Printing House (Oakland, CA)
Paw Prints (Redwood City, CA)
Sonoma Embroidery Company (Sonoma, CA)
Tugboat, Inc. (Napa, CA)
Opposition
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Official Court Reporters Association
California Labor Federation, AFL-CIO
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore and Warehouse Union
Professional and Technical Engineers, Local 21
UNITE HERE!
United Food and Commercial Workers - Western States Conference
Utility Workers of America, Local 132
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091