California Apparel News

On Oct. 9, the newly revised Assembly Bill 633 (AB633), which places tighter controls on the state’s apparel industry, became effective throughout California. Not much more than a month later, many Southern California manufacturers and contractors say they are racing to comply with the new regulations imposed by the state law.

AB633, approved by the state legislature three years ago, holds California’s manufacturers, contractors and retailers liable for labor violations. It requires manufacturers to sign work agreements with garment contractors, and contractors to include on each employee’s pay stub the labels worked on during the pay period. Additionally, both manufacturers and contractors must include garment workers’ registration numbers, workers compensation policy number with expiration date, and other personal employee information on all purchase orders. And, for some, registration fees have increased from $250 to $2,500.

Several industry sources assert that the regulations imposed by the new law simply cannot be implemented overnight.

“There has to be an inception period in which manufacturers and contractors can get comfortable with these new laws—a grace period so that we can adhere to them,” said Ron Perlman, owner of City Girl, a women’s missy sportswear label in Los Angeles. “It’s too complicated.”

Susan Crank, chief executive officer of Anaheim, Calif.–based swimwear manufacturer Lunada Bay Corp., concurs. Though her company, like Perlman’s, is compliant, the new regulations have left her drowning in paperwork. For an individual garment, this may double, triple or even quadruple the amount of administrative work involved in the production process, she said. “We have always been a part of the monitoring process but now AB633 takes it further, making us a third party responsible as wage guarantors,” Crank added.

Earlier this month, the California Department of Labor’s Division of Labor Standards and Enforcement (DLSE) held separate meetings with several of the state’s apparel associations to explain the new regulations and how they would be implemented. These included the California Fashion Association (CFA), Southern California Garment Contractors Association, Korean Garment Contractors Association and Chinese Garment Contractors Association.

Miles Locker, an attorney with the DLSE, said that his agency mailed about 6,000 copies of the regulations to manufacturers and contractors last April, after the department added “more industry-friendly” revisions.

“It was a very public process trying to hash it out on a consensus basis and sharing it with everyone through a public process,” he said. “It’s very distressing to hear members of the industry say it can’t be done, because it has been done already.”

But Joe Rodriquez, executive director of the Southern California Garment Contractors Association (GCA), said that after the DLSE revised AB633’s regulations last April, there was no notification by the department when the regulations would go into effect. “[The DLSE] expected the public to stay upto- date with this, and those who did are a little bit ahead of the curve,” Rodriguez said. Of the 200 members in the GCA, he estimates that “only a handful are already in compliance or very close to it.”

Additionally, Rodriguez said many contractors are finding themselves at odds with manufacturers who are reluctant to commit to legal contracts. “In some cases, contractors will have to drag their manufacturers into compliance because the vast majority of manufacturers don’t have contracts with contractors,” he said.

On the flip side, Michael Kang, president of the Korean American Manufacturers Association (KAMA), said the new regulations put manufacturers in a position where they have to monitor their contractors. “Some manufacturers are afraid they’ll lose their resources if they start telling them how to run their businesses,” he said.

Ilse Metchek, executive director of the California Fashion Association, said that the manufacturers who have worked with accountants and attorneys in the industry who are familiar with federal and state labor laws as they existed prior to AB633 already have some form of a viable contract. “However, this may be a new concept for those who have never had a contract in place—they are the ones scrambling right now,” she said.

Metchek said CFA plans to assist its members with information about the new regulations, and the association’s directory includes a sample form for contracts between manufacturers and contractors. CFA is also talking to software-developing companies about creating programs that are compatible for both manufacturers and contractors. “It’s a bookkeeping nightmare right now,” she said.

In Northern California, Randy Harris, director of San Francisco Fashion Industries (SSFI), said his organization is also assisting its members. “We go over the application with our members to make sure they have all the information the state needs,” he said. Like CFA, SSFI’s membership directory includes labor law information, frequently asked questions and a labor price quote sheet.

Randy Youngblood, chief executive officer at Apparel Resources Inc., an apparel consulting firm in Yorba Linda that assists manufacturers and contractors with labor law compliance, said his clients are not having difficulty adapting to the new laws.

“Most of them are going through their records to make sure they are complying with the law,” he said. “It’s just a matter of making adjustments to their way of doing business and what they have to do to comply with the state’s regulations on record keeping.”

Like CFA’s Metchek, Youngblood agrees that a big problem is the lack of a software program that can list the names of manufacturers. “There’s no payroll program that allows you to do that without some serious code writing,” he said. “Companies are going to have difficulty meeting that requirement, and it’s going to take some time to get those programs going.”

Stan Levy, an attorney with Manatt, Phelps and Phillips in Los Angeles, which represents a number of major manufacturers in Southern California, also said that his clients are adjusting. “This is the law and these are the regulations of the law. Every manufacturer should be in compliance—and that means making sure all of the information is there on the purchase order.”

So far, according to the DLSE, no citations have been issued to manufacturers or contractors for non-compliance. In the meantime, the DLSE plans to mail new application requirements and a copy of the updated regulations to those who renew their registration and apply for new registration, said Locker.

The agency also is planning another meeting with industry representatives to discuss AB633 on Dec. 11 at Fashion Business, Inc. at the New Mart in downtown Los Angeles.