California Apparel News

A few dozen manufacturers and contractors gathered for a public hearing Oct. 12 at the Ronald Reagan Building in downtown Los Angeles to air out concerns about language used in a set of proposed state regulations for AB633, a law passed in 1999 that was intended to hold manufacturers and contractors accountable for their contracted workers’ wages.

The hearing was one of two meetings this month that allowed for public comment on the proposed regulations and purpose of the provisions of AB633.

One portion of the proposed regulations at stake is a requirement that all contractors keep a record of what labels each employee is producing and list on each employee’s pay stub the name of all manufacturers and the percentage of either hours worked, gross sales or number of units the employee produced for each period.

The regulations, their weak points and problems they pose to the apparel industry if they are implemented through AB633 were the topics of the discussion presented to Miles E. Locker, an attorney for the Department of Industrial Relations Division of Labor Standards Enforcement, and Pat Johnson, staff services analyst for the division’s review.

Speakers at the hearing included Stan Levy, an attorney for Manatt, Phelps and Phillips, representing the Kellwood Co.; Joe Rodriguez, Garment Contractors Association (GCA) executive director; Ron Perilman, owner of City Girl; Jennifer M. Bates, an attorney at Sheppard, Mullin, Richter & Hampton LLP, representing GCA; and Christina Chung, a garment industry advocate from the Asian Pacific Legal Center.

Several in the group were concerned that California manufacturers may choose to outsource their production overseas or in Mexico if the new regulations are enacted.

“Generally speaking, Kellwood has no objections to the vast majority of the proposed regulations; however, there are certain regulations to which we have very strong objections,” said Levy. “We believe that they are so onerous and so far beyond the language of the statute that were they to be adopted without modification, our company and its brands here in California would find it virtually impossible from a business perspective to continue to engage in services of contractors located in California.” Regulations Debated

Rodriguez, who is considering filing a lawsuit against the Department of Industrial Relations Division of Labor Standards Enforcement, called AB633 a flawed bill that can be perceived as an “incentive” for manufacturers to source production outside California.

“If we don’t get substantial relief, then we might consider going to court to challenge both the proposed regulations and the statute itself,” Rodriguez said.

Some of the provisions Rodriguez and his supporters (which include Apparel Contractors Alliance of California, a group that includes GCA, the American Chinese Garment Contractors Association, the Korean American Garment Contractors Association and the Northern California Chinese Garment Contractors Association) are seeking clarity for include a proposal that states an employer must pay its employees’ legal fees, regardless of the amount of the claim or amount of eventual settlement. Rodriguez said the proposal is “rife with abuse.”

Another issue at hand is whether or not factory owners, manufacturers and contractors are required to provide their home addresses on registration forms. “The big difference is it’s a state agency getting records to do its job as opposed to a situation where private records are being disseminated to people who don’t need those records,” explained Locker. “We will not be giving out people’s home addresses to anyone. That would not be a matter of public record; that would be something our agency would use ourselves.”

Rodriguez was skeptical of Lockers’ claim that registration information would remain confidential. According to Rodriguez, the information in the registration is a public document that can be easily accessed through freedom of information rules.

Another concern among manufacturers and contractors is the increase in registration fees that, depending on the size of the company, can range from $250 to $2,500. Currently, manufacturers and contractors are paying $250.

Rodriguez is not certain when the industry will receive a response from the board.

“The bottom line is, we need to see our needs met in writing, so we’ll just have to wait and see,” he said. “I don’t want to pressure them into making a hasty decision because every day they delay their decision it works in our favor; our members will continue to pay the $250 renewal fee.”First Hearing in S.F.

A similar hearing was held at the State Building in San Francisco on Oct. 4. The San Francisco meeting drew several labor rights advocates, including Marci Seville, a law professor at Golden Gate University, and Nikki Bas, director of Sweatshop Watch.

There was also a peaceful demonstration of about 200 workers who came to support increased enforcement of the garment laws, according to Locker.

The demonstrators included employees from Wins of California, a Northern California garment factory that was shut down after 180 of its workers claimed the company owed them about four months in back pay—estimated at about $850,000. The factory produced clothing for the U.S. Army and Air Force, Kmart, Sears and Wal-Mart.

Wins has since been taken to court and received an injunction that prohibits it from operating until the suit has been settled. But according to Locker, the company’s owners, Tona “Jimmy” Quan and his wife, Anna Wong, have since gone on to start new operations in the area.

“Tackling these kinds of violations really is an ongoing battle,” Locker said.“We’re trying to get regulations enacted because that’s what we have to do in order to implement AB633. Legislature has already had this debate with manufacturers and the contractors, and we all agree that this type of law is needed.”

Monitoring Compliance

According to a U.S. Department of Labor survey conducted last year, 67 percent of contractors in Southern California were not in compliance with labor laws.

According to Miles E. Locker, an attorney for the Department of Industrial Relations Division of Labor Standards Enforcement, “This [apparel] is an industry that has a level of non-compliance with basic labor laws that, frankly, is quite shocking.” Locker added that the proposed regulations of AB633 were an attempt to benefit both the workers and the law-abiding manufacturers and contractors.

“The reason these regulations should be in everybody’s interest is because it’s going to make it harder for those who don’t play by the rules to get away with it,” Locker said.

The U.S. Department of Labor’s Wage and Hour Division survey showed that manufacturers who used regular monitoring services helped increase last year’scompliance rates. Compliance for monitored shops was at 44 percent, and for non-monitored shops it was 11 percent. The survey covered 101 firms (93 contractors and 8 manufacturers) that were randomly selected from a list of registered apparel-product manufacturers in Los Angeles, Orange, Ventura, Riverside and San Bernardino counties. Additionally, the survey found that minimum-wage law compliance was at 61 percent in thoroughly monitored shops and 11 percent in non-monitored shops. Components of monitoring included review of payroll records, review of timecards, advising firms of compliance problems, recommending corrective action and providing compliance information.

The level of compliance with minimum-wage laws was higher than the level of compliance with overtime requirements. Additionally, the survey found that contractors’ ability to bid for contract work and renegotiate the prices with manufacturers when circumstances change improves contractors’ compliance rates.

“I think AB633 is going to be a really good thing for manufacturers and contractors who have been leaders in the industry and have had good monitoring programs in place,” said Locker. “It’s going to level the playing field and benefit the good contractors and manufacturers by making it much harder for the lawbreakers to undercut them.”