New California Law Expands Brand Liability for Wage Theft, Abolishes Piece-Rate Pay.
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A planned protest this past September turned into a celebratory press conference after the governor signed into law the Garment Worker Protection Act (SB 62), the result of years of organizing by the Garment Worker Center (GWC) and its allies. This legislation for garment worker protections is the first in the country to ban piece-rate wages. It also strengthens an earlier anti-sweatshop law by holding brands liable for labor violations in the factories that make the clothes they sell, regardless of how many layers of subcontracts they employ. Garment workers and their advocates and supporters, including nonprofits and socially responsible manufacturers, cheered outside the California Market Center where they had planned to escalate their campaign, some having planned to risk arrest. Francisco Tzul, who has sewed clothing in Los Angeles for decades, said it was the best day of his life.
Big Brands Profit from Poverty Pay
Garment Workers Receive a Fraction of Minimum Wage
Tzul works in an industry where subminimum wages are the norm. Though today’s minimum wage in Los Angeles is $15 per hour, garment workers receive an average of $5 per hour and as little as $1.25 per hour producing for Los Angeles’s $5 billion garment industry. Randomly inspecting almost a hundred LA garment factories, the Department of Labor found that 85% violated wage laws, meaning those factories pocketed money that workers had legally earned. Francisco says that for a long time he knew he wasn’t being treated fairly, and that the factories weren’t safe, but he didn’t have any idea what could be done about it.
One day in the 1990s he saw Kathie Lee Gifford’s talk show and realized the name was familiar. It was on the label of some of the clothing he sewed, receiving a few cents per piece, or around a dollar per finished product. Tzul says he started to realize that while he struggled to afford rent in a one-bedroom apartment he shared with three friends, some people were getting very rich off the work he was doing. And those people were very far away. Over the years, he learned more about the industry and his rights from radio shows and activist friends. By 2021 he was traveling to Sacramento to share his story with lawmakers and demand justice from big brands.
Subcontracting to Avoid Accountability
Big brands — who demonstrated their power at the start of the pandemic by refusing to pay $40 billion to subcontracted factories that had begun or completed orders — design clothing, purchase materials, and sell finished products, but don’t want the responsibility of directly managing workers. So they subcontract that work to small factory owners.
One former freelance production manager for big brands told me he found his work “horrifying.” He said brands dictate the pay per piece, knowing it isn’t enough to pay a living wage. “You just ask enough people until you get someone to say yes,” he said. The brands didn’t vet the subcontractors, he remembers; all they cared about was unit price and turnaround time. In an investigative report, the Department of Labor found that brands regularly pay factories just 73% of the price necessary to provide workers with the lowest possible legal wage.
Employers Leave Workers Empty-Handed
Factories can appear and disappear quickly, offering the flexibility demanded by today’s fast-fashion garment industry. Trends move so fast that there often isn’t even time to source from overseas. As soon as Kim Kardashian’s new look thrills her Instagram followers, brands want a similar, cheaper look right away. It doesn’t take much capital investment to open a garment factory — just rented space and rented sewing machines — and when factories don’t have orders, or don’t want to face liability, they often just disappear.
“Ana” has worked in about a dozen of these subcontracted factories, sometimes receiving as little as $210 a week for 57 hours of work. She says when workers stand up for their rights, bosses threaten to close the factory, and it isn’t an empty threat. Factory owners sometimes gave her one day’s notice that they no longer had work for her, and other times she’d show up to work on a Monday to find the factory empty. It had shut down with no notice to the workers at all.
History of Organizing by Garment Workers and Legislation for Protections
Garment Workers Union Won Better Conditions
Dangerous and exploitative conditions plagued garment factories from their start after the Industrial Revolution, but labor organizing earned workers more power over their conditions. The International Ladies Garment Workers Union (ILGWU) led waves of strikes in cities across the country throughout the 20th century. This included a 1933 strike of over 3,000 Los Angeles garment workers that lasted almost a month and won garment workers higher wages and fewer hours. At its peak in the 1950s, the ILGWU represented 450,000 workers nationally, over 70% of the garment industry.
Though the center of garment manufacturing moved from New York City to Los Angeles largely because of the latter’s reputation as an anti-union town, by the middle of the century about half of LA’s garment workers were unionized. For a few decades, garment workers enjoyed decent wages and benefits like health insurance, pensions, and retirement plans. Unions negotiated directly with brands, which often agreed to responsibility for subcontracted factories, or to abolish certain forms of subcontracting altogether. Because of their success in winning joint liability agreements, some labor leaders even declared optimistically that “we have wiped out the sweatshop.”
As union and worker power declined and working conditions deteriorated in the latter part of the century, workers became more fragmented and tried other strategies to improve their conditions and keep pressure on brands. Advocates pushed for new laws to require accountability from those who made the most money from workers’ labor. In the early 1990s, California’s legislature passed three joint liability bills, but the governors vetoed them.
Immigrants Forced into Slave Labor in LA
Then in 1992, a woman crawled through an A/C duct in El Monte to escape her captors, who had forced her and 71 other people to sew clothing for 17 to 22 hours a day under threat of deportation and murder of their families. The woman first reached out to the Immigration and Naturalization Service (INS), the precursor to ICE, which ignored the tip. When the victims were freed from captivity a few years later, the INS immediately re-imprisoned them in immigrant detention centers until advocates successfully agitated for their release.
The traffickers had promised their victims, all from Thailand, lucrative jobs in the United States. But when they arrived in California, their captors stole their passports and forced them to live and work in an apartment building with boarded-up windows and 24/7 armed patrols.
Retailers had “legitimately purchased” clothing made in these conditions, the LA Times noted, from brands that had “subcontracted with shops that subcontracted with the El Monte operation.” Media coverage shocked and horrified the nation, who learned that major department stores were legally selling clothing made by enslaved people.
California Passed Legislation in 1999 for Garment Worker Protections
The incident led to a new kind of visa for victims of human trafficking, and to greater pressure to hold big actors accountable for abuse in their supply chains. In 1999, Governor Gray Davis signed AB 633 into law.
Marissa Nuncio, director of the Garment Worker Center, says that while AB 633 didn’t end up going far enough, when it passed it was “groundbreaking.” It recognized the special vulnerability of garment workers by providing an expedited process for workers to resolve their claims. It also “allowed workers to go up the supply chain” for accountability. The GWC formed with support from several local nonprofits, in part to help workers navigate the process of filing wage claims with the labor commissioner. They recovered millions in back wages for garment workers.
But There Were Major Limitations to the Bill
The Garment Worker Collaborative’s evaluation six years later found that even workers who had successfully proven themselves to be victims of wage theft were only able to recover, on average, one third of their stolen wages. Sixty percent of guarantors (brands) didn’t pay a cent to workers despite the labor commissioner’s orders. While some guarantors did pay the full amount, overall the report called the bill “little more than an empty promise.”
“What happened quickly in the industry was they found a loophole in 633, which was that only companies that can be proven to have direct contracts with these factories can be liable,” says Matthew DeCarolis, an attorney at Bet Tzedek Legal Services, which co-authored the bill. “As a result, companies just created layers of subcontracting” to evade responsibility.
Example: Ross Dress for Less
Nuncio says a “tipping point” came in 2019 during a campaign against Ross Dress for Less. Ross made $1.4 billion in profits that year, while the workers who made their products took home about $5 an hour, far less than the legal minimum wage. The retailer insisted they had no responsibility for the workers who sewed the products they sold. “Ross does not own or operate manufacturing operations in Los Angeles or elsewhere,” they said in a statement. “The claims made by the Garment Worker Center are between the manufacturers’ subcontractors and their workers, not Ross employees.”
Meanwhile on their website they bragged “We’re savvy — our buyers search the globe for the best brands and latest styles. We work directly with manufacturers to negotiate the best deals!” In their Pay Up Ross campaign, workers and advocates held protests in the streets and disrupted Ross’s shareholder meeting. Nuncio said the campaign was grounded in “a moral argument,” but because of subcontracting, “no legal hook.”
New 2021 Legislation for Garment Worker Protections
The Garment Worker Protection Act makes several changes to state law. It prohibits paying garment workers per piece, which served as a cover for employers that illegally paid below minimum wage. The new law also adds stronger measures to impose liability on brands if their subcontractors fail to pay workers’ full legal wages. It empowers the labor commissioner to take action when workers present credible evidence. For example, workers could provide clothing labels that show the brand’s relationship with the employer.
Opponents of the legislation say labor abuses are the responsibility of the factory owners and that the bill goes too far in assigning blame. “It’s talking not only about the brands but the retailers,” says Ilse Metchek, president of the California Fashion Association, which represents banks, landlords, and other large corporations in the industry. “That’s an overreach.” Retailers buy products from other brands, she says, and shouldn’t be held responsible for their business operations.
The bill will only affect retailers who use private-label brands and similar strategies to shield their liability, say the bill’s co-authors. For example, Urban Outfitters reaps half its profits from clothing with a variety of private-label brands owned by Urban Outfitters. Now Urban Outfitters could face responsibility for wage theft under the new law, not just the ephemeral brands it owns. The Garment Worker Protection Act “allows workers to take their claims to the most stable, resourced actors,” says Nuncio, “the ones who profit most off their labor.”
Ban on Piece-Rate Pay
In organizing meetings, workers discussed the political landscape and felt cautiously optimistic. Workers started reaching out to allies in the labor movement and ethical manufacturing world. They also said they wanted legislation to do even more: it should end the piece-rate system.
For over a century, organized garment workers have called for abolishing the system of paying per piece rather than per hour. The piece-rate system, they wrote in 1918, encourages dangerous overwork, “underhanded methods of tricky employers,” and even child labor, as workers bring materials home to keep pace.
“We heard for decades that piece rate was the mechanism used to steal their wages,” said Daisy Gonzalez, the Garment Worker Center’s organizing director. Ana said the system helps her bosses avoid a clear answer to the question: How much will I be paid? “They say, ‘You’ll know on payday. Do you want the job or not?’” Rates of two or three cents per piece — unchanged for decades — also push people to a pace that can permanently damage their health.
How Piece-Rate Pay Enables Subminimum Wages
Ana is currently fighting to recover stolen wages from a Kardashian-owned brand. She spoke of working in a factory eight hours a day, six days a week, and receiving $210 for her work. The factory boss said he could increase it to $300 or more if she started working twelve hours a day. Even when workers did increase production, she said employers adjusted the piece rate down to avoid paying more. She’s relieved that the piece-rate system will be banned. “With an hourly rate we’ll finally know ahead of time how much we make.”
In theory, piece rate can help employers precisely calculate costs, but that’s complicated by the fact that workers have already won some protections. Employers must make up the difference if their earnings don’t amount to minimum wage, and must pay at least minimum wage for any “non-productive” time they spend at work, like setting up or transporting materials. Complying with those protections requires extra accounting, and generally the small-business factories just don’t do it. While opponents of the law say banning piece “creates a disincentive to the goal of being competitive,” and that sometimes piece-rate wages can be good for workers, the law does allow for piece-rate pay as an incentive for bonuses, and it allows unions to agree to piece-rate pay as part of a collective bargaining agreement.
Advocates Refute Industry Claims
The California Chamber of Commerce put this legislation for garment worker protections on its 2021 “Job Killer List,” and Metchek says brands will move their operations to Arizona, Nevada, or Texas for cheaper wages and fewer regulations.
The bill’s advocates say there just isn’t enough infrastructure in those other states. “Everything you need is here,” says Bo Matthew Metz, founder and director of an ethical manufacturing studio and a strong supporter of the bill. He says he can find wash houses, knitters, cutting services, and myriad other services just around the corner from his studio. “You might save some money on an hourly rate for a sewer in Texas, but if you have to ship everything from your dye house in LA to Texas just to sew it, it doesn’t pan out.”
Stronger legislation for garment worker protections may even lure business into California, say some researchers, rather than pushing it away. “Our ethical business allies tell us that wage theft is deterring companies who want to set up shop in California, but are concerned about its atrocious track record,” says Nuncio. Over 150 socially conscious brands endorsed the bill.
Global Trade and LA’s Garment Industry
It isn’t only the small specialty brands that advocates say will stay in — or even return to — California. They point to a concept called nearshoring or insourcing (as opposed to offshoring or outsourcing) where some brands are actually moving more of their production back to the United States. If the pandemic taught the industry anything, says Sanjeev Bahl, founder and director of denim manufacturer Saitex, it’s that supply chains can be disrupted.
Shipping costs have quadrupled since the pandemic. In March 2021 just 40% of global cargo shipments reached their destinations on time. Bahl recently opened a factory in Los Angeles that pays $15 an hour and makes jeans for brands like Gap and J.Crew. He says the chorus of threats to move production elsewhere is lazy, a lack of innovation and a deflection of responsibility. Businesses, he says, need to “stop marginalizing and stop blaming labor.”
Ayesha Barenblat, founder of anti-sweatshop nonprofit Remake, worked for 20 years in fashion’s global supply chain and says Americans often wrongly assume that labor standards are always worse in other countries. “Some of the worst conditions I’ve ever seen — cockroaches running around, poor lighting, no toilet paper in the bathrooms, work at an inhumane pace because piece rate is the standard — have been in California.” She says the bill helps California “catch up” to places like Germany and France, which have already passed due diligence laws, and it can strengthen movements for similar laws elsewhere. After SB 62 passed, Francisco Tzul’s friends in Guatemala saw him on TV and called to congratulate him, saying they plan to organize for similar protections in the garment industry there.
Justice for Garment Workers
Fund for Victims of Wage Theft
Legislation for garment worker protections has inspired similar bills in other industries in California. “That’s the power of policy,” says Nuncio. “You can get sound and good policy, and it can be built upon.” The 1999 act protecting garment workers, for example, set up a restitution fund that inspired a similar bill four years later for car wash workers.
The garment worker restitution fund was set up as a last resort for workers found to be victims of wage theft but unable to recover their wages from either the factory owner or the brand who hired them. Factory owners pay a paltry $75 a year in registration fees, which go into the fund. But because factory owners and brands have simply refused to pay back-wages as ordered by the labor commissioner, the fund has been deeply in deficit. As a result, workers waited from five to twenty years to recover their funds.
Fed up, in 2019 the Garment Worker Center organized workers to travel to Sacramento and demand a replenishment of the fund, which they won. That meant some workers finally recovered unpaid wages after years-long waits. It also meant corporations had successfully relinquished responsibility for wages it had stolen, and passed the bill to taxpayers.
Taking the Fight to Sacramento
For three years, Carmen Torres worked in a factory for almost 60 hours a week and took home just $70 a week. “I went to the church for food to survive,” Torres says. “The struggle was exhausting. I tried asking my boss for more but he said ‘if you don’t like it, there’s the door.’” When her employer laid her off, she went to the Garment Worker Center to file a wage theft complaint with the labor commissioner.
It took two years for the office to rule that she’d been severely underpaid. The brand paid a share of her back wages and the factory owner signed a document agreeing to pay her $26,000 over the next 11 months, but after five months he stopped paying and nobody could find him. The labor commissioner said she could get the rest of the money from the restitution fund, but she’d have to wait in a line that could take up to 20 years.
Torres and other frustrated workers went to Sacramento to demand the government replenish the funds “for workers like me who had worked hard and had their wages stolen.” The bill’s advocates say the new law could put enough pressure on brands that workers won’t have to resort to the restitution fund. Torres, who turns 85 next month, says she hopes the next generation of garment workers will get to actually keep the money they earn.
If you’re a garment worker and your employer has stolen your wages (didn’t fully pay you for the hours you worked), the labor commissioner might help you reclaim your money. It takes a long time and a lot of effort. You can reach out to the Garment Worker Center for assistance: 213-748-5866.