California Apparel News

California’s garment manufacturers have precious few new state and federal laws to adapt to in 2007. “We are not aware of any legislation that particularly affects the garment, fashion and apparel industry more than any other industry,” said Stan Levy, a partner at Los Angeles law firm Manatt Phelps Phillips LLP.

Most changes involve tweaking administrative procedures here and there. The big change comes with the state’s increase of the minimum wage by 75 cents to $7.50 (with an additional 50-cent increase to $8 per hour planned for next year).

The effects of the wage increase would be far-reaching.

“Employers should consider that the new minimum wage doesn’t just affect employees [at the minimum-wage level]. It has a broader ripple effect across the entire wage spectrum,” said Vince Sollitto of the California Chamber of Commerce. For example, some employees may have clauses in their contracts that specify they must be paid a certain percentage above the minimum wage, he said.

Some manufacturers are already feeling the sting. “The minimum-wage increase is going to cost me hundreds of thousands of dollars. That’s the way it is. It’s the law. And you can’t just give it to the employees earning minimum wage—you have to give a raise across the board,” said Steve Barraza, founder of Los Angeles–based womenswear manufacturer Tianello. Barraza said he gave all Tianello employees a raise of about 75 cents because of the minimum-wage increase.

Other manufacturers are doing the same and passing the cost on to their clients, he said. “If you choose to manufacture here, you’ve got to pay it. I think it will hurt domestic production,” he said. “I’ve already received letters from some of our dye houses saying that they are raising their prices 11 or 12 percent, and other people who do labor for us are also raising their prices,” he said. To help carry the added costs, Barraza said is raising Tianello’s wholesale prices immediately. “I have no choice,” he said. “Some people are to choose to continue with us, and some are going to say it’s too expensive.”

California laws

California Apparel News has compiled a list of current legislation to help employers plan for 2007.

bull; AB1835 increases California’s minimum wage to $7.50 per hour as of Jan. 1, 2007, and to $8 per hour on Jan. 1, 2008.

bull; AB2095 allows for the reporting of overtime hours on the same payroll date as the hours are paid when overtime is paid in the payroll period subsequent to the one during which it was earned.

bull; AB2440 penalizes employers that help their employees or contractors avoid their child-support obligations. Failure to file reports upon hiring will be considered “help” on the part of employers.

bull; AB2067 picks up where California’s Smoke Free Workplace Act of 1994 left off. The 1994 measure prohibits smoking in public buildings and in all enclosed places of employment.

AB2067 further prohibits smoking in “common areas” of covered parking lots, which include restrooms, elevators, stairwells, lobbies, lounges and waiting areas.

bull; AB2095 limits compulsory sexual harassment training to supervisors in California.

bull; AB2068 allows for the pre-designation of a medical group as the primary physician and extends the sunset date of the right of pre-designation.

bull; AB2292 pays workers’ compensation death benefits to an employee’s estate in case of death. If a deceased worker doesn’t have a beneficiary, the worker’s compensation death benefits are to be paid to California’s State Department of Industrial Relations.

Employers must display updated 2007 California and federal employment posters in a prominent location where employees can read them and distribute California’s unemployment insurance and disability insurance pamphlet, state disability insurance provisions pamphlet, workers’ compensation rights and benefits pamphlet, sexual harassment information sheet and paid family leave pamphlets to employees.

The California Chamber of Commerce will offer labor law and human resources seminars across the state during January. For more information, call (800) 331-8877.

Federal laws

The Pension Protection Act of 2006 makes the incentives provided by the Economic Growth and Tax Relief Reconciliation Act of 2001 permanent. The newly permanent incentives include higher deductibles for employer contributions to employee plans and calls for employees’ automatic enrollment in 401k plans unless they decline to participate.

Planning ahead

In 2006, California passed legislation to reduce the state’s greenhouse gas emissions. While the California Global Warming Solutions Act of 2006 calls for the state to adopt a plan by January 1, 2009, indicating how emission reductions will be achieved from significant greenhouse gas sources via regulations, market mechanisms and other actions, Sollitto urges businesses to begin looking for ways to conserve energy now. “The greenhouse gas law will have a dramatic effect on the cost of energy. Any steps employers can take to improve their effective use of energy is wise,” he said.