Start-Up Companies Worry About Effects of AB633

Some of the smaller start-up apparel firms that make up the Los Angeles fashion trade say the effects of newly revised state assembly bill 633, which calls for manufacturers to sign work agreements with contractors and adhere to a strict reporting procedure, may cripple that segment of the industry with its fee structure and regulations.

A number of designers and emerging apparel companies questioned labor department commissioner Art Lujan and attorney Miles Locker, who spoke about AB633 during a business mixer sponsored by trade organization Fashion Business, Inc. Dec. 11 at the New Mart in Los Angeles. The law was revised in October to place heavier requirements on manufacturers and contractors to comply with labor laws. Manufacturers and contractors are now required to sign work agreements with each other and report workers’ registration numbers, workers’ compensation policies, job information and other data.

Several freelance designers and smaller companies at the FBI event were surprised to learn that AB633 would apply to their smallvolume businesses, even if they are just producing samples. Locker, an attorney for the Department of Labor Standards Enforcement, said if apparel designers create samples and eventually sell them at a sample sale or another outlet, they would be required to follow the guidelines of AB633, which states that anyone who makes or contracts someone to make a garment for sale has to follow the guidelines of AB633.

Designers such as Tracy Wilkinson, of Mon Petit Oiseau, also expressed concerns over the law’s registration fees, which run from $750 to $2,500 per year.

“Some of us start our companies with only $1,000, so $750 is going to be difficult,” she said.

FBI director Frances Harder said the effects of AB633 on smaller companies can “become very devastating.”

“It seems like the smaller companies— which is what L.A. is all about—are getting squeezed from every angle,” she said. “It’s tough enough surviving with the day-to-day business and now having to worry about keeping track of worrying about who produces for whom.”

Others questioned Locker and Lujan on whether peripheral players in the supply chain such as brokers, fulfillment companies, retailers, subcontractors and other parties would fall under the jurisdiction of AB633. Locker explained that it all comes down to the initial party that engages another to produce a garment for sale.

“It’s not our intent to drive you out of business,” said Lujan. “A lot of thought has gone into this and [making the revisions] has been done through an incredibly democratic process.”

Lujan said the state will be exploring making possible amendments to the law in the future to potentially exempt certain parties that the law may affect unfairly, but he wasn’t making any promises. Both Lujan and Locker stressed that the apparel industry should start keeping detailed records going forward.

Harder said the FBI may explore the idea of hosting “compliance schools” with the Garment Contractors Association to help the industry adhere to AB633. —Robert McAllister