California Becomes First State to Ban Piece Rate Pay for Garment Workers

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Epstein Becker & Green

On September 27, 2021, California Governor Gavin Newsom signed into law the Garment Worker Protection Act, which makes California the first state to ban piece rate pay for garment workers, requiring instead that they be paid the minimum hourly wage.

The Division of Labor Standards Enforcement Manual defines piece rate as, “[w]ork paid for according to the number of units turned out … [that] must be based upon an ascertainable figure paid for completing a particular task or making a particular piece of goods.”

Effective January 1, 2022, SB 62 will prohibit employers from paying employees engaged in garment manufacturing by a piece rate. The bill imposes a $200 fine per employee against a garment manufacturer or contractor, payable to the employee, for each pay period where the employee is paid by the piece rate.

The legislation expands liability for unpaid wages, including wage theft by contractors, to fashion brands. The law makes garment manufacturers, contractors, and “brand guarantors” who contract with another person for the performance of garment manufacturing joint and severally liable with any manufacturer and contractor for the full amount of unpaid wages and any other compensation, penalties, and attorney’s fees  due to a garment manufacturing employee for a violation of SB 62. The law defines “brand guarantor” as, “a person 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.”

Employees will be able to enforce their rights under the law solely by filing a claim with the Labor Commissioner. However, the law creates a rebuttable presumption that a brand guarantor or garment manufacturer is liable with the contractor for any amounts found to be due to the employee. The bill also gives the Labor Commissioner authority to enforce the law by issuing a stop order or a citation.

SB 62 also requires garment manufacturers and brand guarantors to keep all contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation related to garment manufacturing performance for four years.

We will continue to monitor developments from California that may provide further guidance on compliance with and enforcement of SB 62. In the meantime, garment manufacturers and brand guarantors should ensure that their wage payment practices and recordkeeping procedures are compliant with SB 62 in advance of the law’s January 1, 2022 effective date.

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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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