California Apparel News

There may be some changes in store next year for the California sweatshop-reform bill known as Assembly Bill 633.

Jose Millan, deputy secretary of the state Labor and Workforce Development Agency, said his staff is already working with state legislators to revise the bill.

The principal revision would define the circumstances under which a retailer could be held responsible for paying the minimum wages or overtime pay of workers employed by a garment contractor.

“We can make it clear what they have to do to not be considered a garment manufacturer,” he said. “Right now it is too fuzzy.”

Clarifying the issue might include stipulating that if retailers buy fabric to produce the garments, they might be held responsible for pay issues.

“It’s not going to be easy,” Millan noted. “But we have to do it for the garment industry to be competitive.”

Millan was the featured speaker at a Dec. 15 panel discussion held at the California Market Center and organized by the California Fashion Association. Other panelists included Stan Levy, an attorney with Manatt, Phelps & Phillips, who served as moderator, Cara Chacon, director of training and development for Cal Safety Compliance Corp., an independent monitoring company; Lonnie Kane, president of womenswear manufacturer Karen Kane Inc.; Janet Wells, president and chief executive of Insta Graphic Systems, a manufacturer of heat seal transfers and machines, and attorney Laura Worsinger of Los Angeles law firm Buchalter, Nemer, Fields & Younger.

Controversial law

AB633 has been a controversial piece of legislation ever since it went into effect in 2000. The bill attempts to address wage and overtime violations and help workers who have been denied back wages by extending liability along the supply chain.

This has put a damper on California’s garment-contracting business. Many retailers and manufacturers have decided to take their contracting business outside the state to avoid any liability for paying the wages of a contractor’s workers.

“We actually lost business with a major retailer about two years ago because of AB633,” said Wells of Insta Graphic, who declined to name the California retailer, but said other retailers have also expressed concern.

“About a year and a half ago, we met with executives from Federated [Department Stores Inc.] who also brought up doing business in California, saying they were not sure about AB633,” Wells said. “They said they are watching what is taking place. Obviously, there is a lot of concern, and there is a lot of gray area.”

Millan acknowledged that AB633 has left California businesses at a disadvantage. He recalled an hour-long telephone conversation this summer with David Alpert, owner of Overwear, a Los Angeles garment contractor who used to do $500,000 a year in T-shirt and bathrobe business with the Bellagio Hotel & Casino in Las Vegas. But the Bellagio decided to cancel its orders because the company felt it might be responsible for any wages owed Overwear’s employees if Alpert did not meet his payroll obligations. Alpert said Bellagio’s concerns were unfounded.

Ripple effect

Worsinger, whose law firm has several apparel clients, wondered how much more business will be lost because of retailers’ perceptions about dealing with California manufacturers.

She cited the case of Los Angeles–based retailer Forever 21 Inc., which recently settled a dispute with garment workers. The workers claimed they had been denied minimum wage in the garment shops where they made clothes for Forever 21. (See related story page here.) In a defamation suit filed by Forever 21 in 2002 against the garment workers and the Garment Worker Center, the Second District Court of Appeal dismissed the case against the workers, who had distributed leaflets saying the retailer was using sweatshops that underpaid laborers.

“This is probably one of the few court cases published with respect to the meaning of AB633 and whether retailers can be considered [wage] guarantors,” Worsinger said. “The court said in a written decision citing state labor-code sections 2673 and 2671 that retailers had an obligation to assure the proper overtime and minimum wage payments of the employees of manufacturers that produce clothing specifically for sale in the retailers’ stores.”

Changing the lunch-break rule

Millan also discussed the new state rule governing lunch breaks.

Millan is the official behind legislation stating that employees can wait up until the beginning of the sixth hour of their workday, instead of the fifth hour, to take their meal break.

He wanted to change the lunch-break rule because he got several complaints from employees saying they started their jobs at 6 a.m., their colleagues started working at 6:30 a.m., and they all wanted to eat together. “Employees should be treated like adults and not like children who are told when they take their meal break,” Millan said.

The new lunch-break rule was to go into effect on Dec. 20, but Millan said he expects labor organizations to file a temporary restraining order to delay the legislation.

Labor leaders object to the change because they feel it could help employers eliminate the meal-break requirement.