California Bans Piece Rate Pay for Garment Workers

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Ervin Cohen & Jessup LLP

On January 1, 2023, Senate Bill 62, the Garment Worker Protection Act, will become effective, making California the first state to ban piece rate pay for garment workers. SB 62 prohibits any “employee engaged in the performance of garment manufacturing” from being “paid by the piece or unit, or by the piece rate.” The law creates a compensatory damages penalty of $200 per employee against a garment manufacturer or contractor, payable to the employee, for each pay period in which each employee is paid by the piece rate. “Garment manufacturing” is defined to include sewing, cutting, making, processing, repairing, finishing, assembling, dyeing, altering a garment’s design, causing another person to alter a garment’s design, or affixing a label to a garment. 

Importantly, SB 62 takes the unusual step of making retailers and fashion brands jointly and severally liable as “brand guarantors” with any garment manufacturer for the unpaid wages, reimbursement of expenses, interest, and any other compensation owed to manufacturing employees, along with the employee’s attorneys’ fees and costs, as well as civil penalties.  Specifically, the law defines the “brand guarantor” as the company contracting for the performance of garment manufacturing, regardless of whether the person with whom they contract performs manufacturing operations or hires a contractor or subcontractor to perform manufacturing operations.  Retailers who purchase from California-based garment manufacturers are thus subject to lawsuits for unpaid wages, penalties and attorneys’ fees sought by California-based manufacturing employees.    

Garment workers can enforce their rights under the law simply by filing a claim with the Labor Commissioner. An employee may establish a presumption of liability with little evidence, such as a brand label “or other credible information”. Further, the law creates a rebuttable presumption that a garment manufacturer or brand guarantor is jointly and severally liable with the contractor for any amounts found owed to the employee.  SB 62 also establishes an expedited basis for the Labor Commissioner hearing process, requiring that a decision or award be issued in 90 to 120 days from the date a claim is received. 

The law also creates cumbersome new recordkeeping requirements, which extend to any entity in the chain of the garment manufacturing process, including brand guarantors. Starting January 1, 2022, garment manufacturers, contractors, and brand guarantors now are required to keep all contracts, invoices, purchase orders, work orders, style sheets, and any other documentation related to garment manufacturing performance for four years.  In addition, garment manufacturers are required to keep employment and payroll records for the same four-year time period, increasing the existing three-year requirement.

In enacting SB 62 and outlawing piece rate work, the California Legislature purportedly sought to address subminimum wages as well as unsafe working conditions, stating that “garment workers are forced to constantly work as quickly as possible to complete as many items as possible in a workday.”  However, the California Chamber of Commerce characterized SB 62 as a “job-killer” bill and urged Governor Newsom to veto it.  In a statement lauding the law, Newsom’s office characterized the law as “nation-leading legislation that will end decades-old, unfair pay practices and require garment manufacturers to pay workers an hourly wage.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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