Seyfarth Synopsis: SB 62, which became effective January 1, 2022, makes those involved in the chain of garment manufacturing jointly and severally liable for certain labor law violations, and eliminates piece-rate compensation for workers in the garment industry. As expected, the Labor Commissioner is stepping up enforcement in the new year and those in the industry should ensure they don’t run afoul of SB 62’s new requirements.
Valentine’s Day is quickly approaching, which means mailboxes will soon be filled with colorful greeting cards, boxes of candies and chocolates, and romantic notes from our loved ones. But for those in the garment industry, this year’s holiday might bring with it not just a lovely Valentine, but also an uptick in enforcement measures from the Labor Commissioner’s Office.
Love Is In The Air, But Not For Those Who Fail To Pay The Minimum Wage
As we predicted back in May, the aptly named Garment Worker Protection Act (“SB62”) was signed into law in October and took effect on January 1, 2022. This law eliminates piece-rate compensation and requires garment manufacturers to pay employees at least the minimum wage.
Even more significantly, the new law holds all entities “engaged in the business of garment manufacturing” jointly and severally liable for any failures to pay minimum wage and overtime pay, regardless of how many others are involved in the chain of manufacturing. For example, a retailer who contracts with a subcontractor to perform garment manufacturing operations can now be found jointly and severally liable with the subcontractor, and any of the subcontractor’s subcontractors, no matter how many steps removed they may be from the retailer. Those newly-subject to the Act may be confounded as to whether they are engaged in the business of “garment manufacturing” because the already broad term has been expanded to mean “assembling, dyeing, altering a garment’s design, causing another person to alter a garment’s design, [or even] affixing a label to a garment.”
The Department of Industrial Relations took the publication of the alleged violation as an opportunity to warn all in the garment manufacturing industry that the new law is here and will be enforced. Indeed, as the Labor Commissioner’s news release states, SB 62 will “change the way many garment manufacturers operate.” Thus, we surmise that this friendly update was not designed to spread love and holiday cheer, but rather serves as a strict warning to those in the garment industry that the Labor Commissioner intends to prioritize enforcement of SB 62.
Check Those Mailboxes—Enforcement Orders May Be On Their Way
At the turn of the new year, the Labor Commissioner issued a news release warning garment manufacturers that it had recently revoked the license of a Los Angeles garment manufacturer for labor law violations. The notice alleges that the garment manufacturer in question had falsely claimed it had no employees, but an inspection by the Labor Commissioner’s Office revealed quite the opposite. The manufacturer was cited for failing to provide proof of workers’ compensation insurance and ordered to cease work until the issue could be remedied.
The Labor Commissioner reported that after multiple attempts to contact the manufacturer went unanswered, and after an inspector was turned away on a follow-up visit, the Labor Commissioner had no choice but to revoke the manufacturer’s license for willfully violating labor law. This holiday story serves as a careful reminder to all in the garment industry that the Labor Commissioner has its eye on you and yours, and that the newly enacted Garment Worker Protection Act will be enforced with authority.
Don’t Get Caught without a Valentine—Ensure Compliance with the New Law Now
On January 25, 2022, the Labor Commissioner’s Office hosted a free training on SB 62, and is set to host regular training on the subject in the future. At this training, the Labor Commissioner’s Office made it abundantly clear that enforcement of SB 62 is well under way, and as of January 1, 2022, piece-rate compensation is unlawful (with narrow exceptions). Industry employers, manufactures, retailers, and all who are interested in learning more and registering for future trainings are encouraged to visit the Labor Commissioner’s website here. The Labor Commissioner’s Office is also reportedly conducting in-person outreach to those in the industry, so be on the lookout for a postcard or visit from your local inspector.
With SB 62 enacted, and the Labor Commissioner prioritizing enforcement of the newly-added provisions, employers should ensure they are complying with the new requirements and be prepared to respond to any inspection, inquiry, or audit that may come through their front door or mailbox. Your Seyfarth counselors are here to help you with negotiating contracts and looking at labor and employment compliance as needed in your supply chain.
Edited by Coby Turner