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In a two day sweep, investigators for the California Labor Commissioner issued $682,344 in fines to 18 different Los Angeles based garment manufacturers. Over $600,000 of the fines were issued against 6 different garment makers for failing to maintain workers' compensation insurance.
California Labor Commissioner Julie A. Su warned, in the agencies press release last week, that the California Labor Commissioner "will shine a light on the underground economy and those who contract with unregistered contractors will also be held accountable." While no big-name clothing companies were named, it is not uncommon for major brands to contract out the manufacturing of their product lines.
As Commissioner Su pointed out, unregistered garment manufacturers that pay workers below minimum wage as well as skirt the legal requirements employers are required to follow, make being competitive more difficult for legitimate, honest garment manufacturers. Shockingly, of the 22 work-sites investigated, 82% (or 18) were found to be in violation of the labor code. The 18 manufacturers collectively employ 296 workers.
In addition to the violations of the specific garment manufacturing requirements, investigators are now looking into claims of wage theft. As these garment makers were potentially under contract from large brands, it is worth noting that the large brands could be on the hook for the wage claims. Under the Garment Manufacturing Act of 1990, manufacturers or brands that contract with unregistered entities can be deemed joint employers.
As the U.S. Dept. of Labor, as well as the LA Times, have previously reported, Southern California is still a hotbed of illicit activity in the garment industry. Clearly, there are many manufacturers willing to break the law in order to save a few dollars. In 2012, the US DoL recovered over $325,000 for 185 employees across 10 different garment manufacturers.
In addition to the fines issued and the pending wage theft investigation, the Labor Commissioner also confiscated $155,000 worth of clothing from the unregistered manufacturers. The clothing cannot be sold by law, and as such, will be donated to homeless shelters as well as shelters for victims of domestic violence throughout Los Angeles.
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