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AB-633 Labor: garment manufacturing.(1999-2000)

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Assembly Bill No. 633
CHAPTER 554

An act to amend Sections 2671, 2675, 2675.5, 2676, 2677, and 2680 of, and to add Sections 2673.1, and 2684 to, the Labor Code, relating to labor, and making an appropriation therefor.

[ Filed with Secretary of State  September 29, 1999. Approved by Governor  September 28, 1999. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 633, Steinberg. Labor: garment manufacturing.
Existing law requires every person engaged in the business of garment manufacturing, as defined, to register with the Labor Commissioner and to pay an initial registration fee of $150 and an annual renewal fee of $100. Existing law imposes certain other requirements on garment manufacturers, and provides for administration and enforcement of the garment manufacturing provisions by the Labor Commissioner.
This bill would substantially revise the existing law on state regulation of garment manufacturing. The bill would revise the definition of garment manufacturing to authorize the Department of Industrial Relations to adopt regulations to include additional operations and practices in the apparel industry that are consistent with the garment manufacturing registration provisions. The bill would also authorize the department to adopt and amend regulations to clarify and refine that statutory definition. The bill would add a new definition of “contractor” and revise the definition of “person.” The bill would revise the existing law for setting the registration and renewal fees for persons in garment manufacturing to require the fees to be set in the aggregate to recover costs of administration of the law and to be based on an applicant’s annual volume, but to be not less than $250 nor more than $1,000, in the case of a contractor, or $2,500, in the case of other registrants.
Existing law requires the commissioner to deposit $25 of each registrant’s annual registration fee into a separate account and requires that the funds in the separate account be disbursed only to persons damaged by a registrant where damages exceed the limits of a registrant’s bond.
This bill would increase the amount of each registrant’s annual registration fee deposited into the separate account to $75, thereby making an appropriation. The bill would revise these provisions to authorize the commissioner to disburse the funds to persons damaged by failure of a garment manufacturer, jobber, contractor, or subcontractor to pay wages or benefits. The bill would provide that a person engaged in garment manufacturing who contracts with an unregistered or unbonded person for garment manufacturing shall be deemed an employer of the contractor’s employees and shall be jointly liable with the contractor for the payment of wages to the contractor’s employees, and would specify the process by which this liability may be enforced.
Nothing in existing law makes garment manufacturers liable for guaranteeing payment of wages to employees of their contractors.
This bill would impose that liability to the extent of requirements for payment of the minimum wage and overtime compensation. The bill would prescribe a claims procedure by which an aggrieved employee may enforce a claim for unpaid wages against the contractor and the garment manufacturer contracting with the contractor. The bill would require the Labor Commissioner to investigate these claims, hold meet-and-confer conferences and hearings, and issue decisions and awards, as specified. The bill would also authorize the Labor Commissioner to enforce this guarantee in the same manner as proceeding against the employer, with or without a complaint being filed, subject to the procedures specified in the bill. The bill would authorize the Labor Commissioner to revoke the registration of any garment manufacturer that fails to pay a wage award issued pursuant to the bill. The bill would make the successor of a garment manufacturer primarily engaged in sewing or assembly of garments for other persons, and that owes wages, also liable for payment of those wages under specified circumstances, but this provision would not apply to the wage guarantee obligation established by the bill. The bill would make conforming related changes.
Existing law authorizes the Division of Labor Standards Enforcement of the Department of Industrial Relations to confiscate any garment or wearing apparel assembled or partially assembled by a person who has not complied with the garment manufacturing registration requirements and requires the division to notify the manufacturer and contractor of the removal and the location of the confiscated goods.
This bill would, with a specified exception, authorize the division to confiscate the means of production, including equipment and property, from unregistered garment manufacturers if the garment manufacturer is a contractor that has been subject to a previous confiscation within the prior 5 years. The bill would require the proceeds of sales of the equipment or property to be deposited into a Back Wages and Taxes Account, which the bill would create in the General Fund, and would authorize the Labor Commissioner, upon appropriation, to use moneys in the account to pay back wages owed to garment workers and taxes.
Existing law does not make the successor, to an employer primarily engaged in sewing or assembly of garments for other persons engaged in the business of garment manufacturing, liable for unpaid wages owed to the predecessor’s employees.
This bill would impose that liability under prescribed conditions.
Appropriation: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 2671 of the Labor Code is amended to read:

2671.
 As used in this part:
(a) “Person” means any individual, partnership, corporation, limited liability company, or association, and includes, but is not limited to, employers, manufacturers, jobbers, wholesalers, contractors, subcontractors, and any other person or entity engaged in the business of garment manufacturing.
“Person” does not include any person who manufactures garments by himself or herself, without the assistance of a contractor, employee, or others; any person who engages solely in that part of the business engaged solely in cleaning, alteration, or tailoring; any person who engages in the activities herein regulated as an employee with wages as his or her sole compensation; or any person as provided by regulation.
(b) “Garment manufacturing” means sewing, cutting, making, processing, repairing, finishing, assembling, or otherwise preparing any garment or any article of wearing apparel or accessories designed or intended to be worn by any individual, including, but not limited to, clothing, hats, gloves, handbags, hosiery, ties, scarfs, and belts, for sale or resale by any person or any persons contracting to have those operations performed and other operations and practices in the apparel industry as may be identified in regulations of the Department of Industrial Relations consistent with the purposes of this part. The Department of Industrial Relations shall adopt, and may from time to time amend, regulations to clarify and refine this definition to be consistent with current and future industry practices, but the regulations shall not limit the scope of garment manufacturing, as defined in this subdivision.
(c) “Commissioner” means the Labor Commissioner.
(d) “Contractor” means any person who, with the assistance of employees or others, is primarily engaged in sewing, cutting, making, processing, repairing, finishing, assembling, or otherwise preparing any garment or any article of wearing apparel or accessories designed or intended to be worn by any individual, including, but not limited to, clothing, hats, gloves, handbags, hosiery, ties, scarfs, and belts, for another person. “Contractor” includes a subcontractor that is primarily engaged in those operations.

SEC. 2.

 Section 2673.1 is added to the Labor Code, to read:

2673.1.
 (a) To ensure that employees are paid for all hours worked, a person engaged in garment manufacturing, as defined in Section 2671, who contracts with another person for the performance of garment manufacturing operations shall guarantee payment of the applicable minimum wage and overtime compensation, as required by law, that are due from that other person to its employees that perform those operations.
(b) Where the work of two or more persons is being performed at the same worksite during the same payroll period, the liability of each person under this guarantee shall be limited to his or her proportionate share, as determined by the Labor Commissioner pursuant to paragraph (3) or (4) of subdivision (d).
(c) Employees may enforce this guarantee solely by filing a claim with the Labor Commissioner against the contractor and the guarantor or guarantors, if known, to recover unpaid wages. Guarantors whose identity or existence is unknown at the time the claim is filed may be added to the claim pursuant to paragraph (2) of subdivision (d).
(d) Claims filed with the Labor Commissioner for payment of wages pursuant to subdivision (c) shall be subject to the following procedure:
(1) Within 10 business days of receiving a claim pursuant subdivision (c), the Labor Commissioner shall give written notice to the employee, the contractor, and persons that may be guarantors of the nature of the claim and the date of the meet-and-confer conference on the claim. Within 10 business days of receiving the claim, the Labor Commissioner shall issue a subpoena duces tecum requiring the contractor to submit to the Labor Commissioner those books and records as may be necessary to investigate the claim and determine the identity of any potential guarantors for the payment of the wage claim, including, but not limited to, invoices for work performed for any and all persons during the period included in the claim. Compliance with such a request for books and records, within 10 days of the mailing of the notice, shall be a condition of continued registration pursuant to Section 2675. At the request of any party, the Labor Commissioner shall provide to that party copies of all books and records received by the Labor Commissioner in conducting its investigation.
(2) Within 30 days of receiving a claim pursuant to subdivision (c), the Labor Commissioner shall send a notice of the claim and of the meet-and-confer conference to any other persons who may be guarantors with respect to the claim.
(3) Within 60 days of receiving a claim pursuant to subdivision (c), the Labor Commissioner shall hold a meet-and-confer conference with the employee, the contractor, and all known potential guarantors to attempt to resolve the claim. Prior to the meet-and-confer conference, the Labor Commissioner shall conduct and complete an investigation of the claim, shall make a finding and assessment of the amount of wages owed, and shall conduct an investigation and determine each guarantor’s proportionate share of liability. The investigation shall include, but not be limited to, interviewing the employee and his or her witnesses and making a finding and assessment of back wages due, if any, to the employee. An employee’s claim of hours worked and back wages due shall be presumed valid and shall be the Labor Commissioner’s assessment, unless the contractor provides specific, compelling, and reliable written evidence to the contrary and is able to produce records pursuant to subdivision (d) of Section 1174 or Section 2673 that are accurate and contemporaneous, itemized wage deduction statements pursuant to Section 226, bona fide complete and accurate payroll records, and evidence of the precise hours worked by the employee for each pay period during the period of the claim. If the Labor Commissioner finds falsification by the contractor of payroll records submitted for any pay period of the claim, any other payroll records submitted by the contractor shall be presumed false and disregarded.
The Labor Commissioner shall present his or her findings and assessment of the amount of wages owed and each guarantor’s proportionate share thereof to the parties at the meet-and-confer conference and shall make a demand for payment of the amount of the assessment. If no resolution is reached, the Labor Commissioner shall, at the meet-and-confer conference, set the matter for hearing pursuant to paragraph (4). The Labor Commissioner’s assessment, pursuant to this paragraph, of the amount of back wages due is solely for purposes of the meet-and-confer conference and shall not be admissible or be given any weight in the hearing conducted pursuant to paragraph (4). If the Labor Commissioner has not identified any potential guarantors after investigation and the matter is not resolved at the conclusion of the meet-and-confer conference, the Commissioner shall proceed against the contractor pursuant to Section 98.
(4) The hearing shall commence within 30 days of, and shall be completed within 45 days of, the date of the meet-and-confer conference. The hearing may be bifurcated, addressing first the question of liability of the contractor and the guarantor or guarantors, and immediately thereafter the proportionate responsibility of the guarantors. The Labor Commissioner shall present his or her proposed findings of the guarantor’s proportionate share at the hearing. Any party may present evidence at the hearing to support or rebut the proposed findings. Except as provided in this paragraph, the hearing shall be held in accordance with the procedure set forth in subdivisions (b) to (h), inclusive, of Section 98. It is the intent of the Legislature that these hearings be conducted in an informal setting preserving the rights of the parties.
(5) Within 15 days of the completion of the hearing, the Labor Commissioner shall issue an order, decision, or award with respect to the claim and shall file the order, decision, or award in accordance with Section 98.1.
(e) An employee shall be entitled to recover, from the contractor, liquidated damages in an amount equal to the wages unlawfully withheld, as set forth in Section 1194.2, and liquidated damages in an amount equal to unpaid overtime compensation due. A guarantor under subdivision (a) shall be liable for its proportionate share of those liquidated damages if the guarantor has acted in bad faith, including, but not limited to, failure to pay or unreasonably delaying payment to its contractor, unreasonably reducing payment to its contractor where it is established that the guarantor knew or reasonably should have known that the price set for the work was insufficient to cover the minimum wage and overtime pay owed by the contractor, asserting frivolous defenses, or unreasonably delaying or impeding the Labor Commissioner’s investigation of the claim.
(f) If either the contractor or guarantor refuses to pay the assessment, and the employee prevails at the hearing, the party that refuses to pay shall pay the employee’s reasonable attorney’s fees and costs. If the employee rejects the assessment of the Labor Commissioner and prevails at the hearing, the employer shall pay the employee’s reasonable attorney’s fees and costs. The guarantor shall be jointly and severally liable for the contractor’s share of the attorney’s fees and costs awarded to an employee only if the Labor Commissioner determines that the guarantor acted in bad faith, including, but not limited to, failure to pay, unreasonably delaying payment to the contractor, unreasonably reducing payment to the contractor where it is established that the guarantor knew or reasonably should have known that the price set for the work was insufficient to cover the applicable minimum wage and overtime pay owed by the contractor, asserting frivolous defenses, or unreasonably delaying or impeding the Labor Commissioner’s investigation of the claim.
(g) Any party shall have the right to judicial review of the order, decision, or award of the Labor Commissioner made pursuant to paragraph (5) of subdivision (d) as provided in Section 98.2. As a condition precedent to filing an appeal, the contractor or the guarantor, whichever appeals, shall post a bond with the Commissioner in an amount equal to one and one-half times the amount of the award. No bond shall be required of an employee filing an appeal pursuant to Section 98.2. At the employee’s request, the Labor Commissioner shall represent the employee in the judicial review as provided in Section 98.4.
(h) If the contractor or guarantor appeals the order, decision, or award of the Labor Commissioner and the employee prevails on appeal, the court shall order the contractor or guarantor, as the case may be, to pay the reasonable attorney’s fees and costs of the employee incurred in pursuing his or her claim. If the employee appeals the order, decision, or award of the Labor Commissioner and the contractor or guarantor prevails on appeal, the court may order the employee to pay the reasonable attorney’s fees and costs of the contractor employer or guarantor only if the court determines that the employee acted in bad faith in bringing the claim.
(i) The rights and remedies provided by this section do not preclude an employee from pursuing any other rights and remedies under any other provision of state or federal law. If a finding and assessment is not issued as specified and within the time limits in paragraph (3) of subdivision (d), the employee may bring a civil action for the recovery of unpaid wages pursuant to any other rights and remedies under any other provision of the laws of this state unless, prior to the employee bringing the civil action, the guarantor files a petition for writ of mandate within 10 days of the date the assessment should have been issued. If findings and assessments are not made, or a hearing is not commenced or an order, decision, or award is not issued within the time limits specified in paragraphs (4) and (5) of subdivision (d), any party may file a petition for writ of mandate to compel the Labor Commissioner to issue findings and assessments, commence the hearing, or issue the order, decision, or award. All time requirements specified in this section shall be mandatory and shall be enforceable by a writ of mandate.
(j) The Labor Commissioner may enforce the wage guarantee described in this section in the same manner as a proceeding against the contractor. The Labor Commissioner may, with or without a complaint being filed by an employee, conduct an investigation as to whether all the employees of persons engaged in garment manufacturing are being paid minimum wage or overtime compensation and, with or without the consent of the employees affected, commence a civil action to enforce the wage guarantee. Prior to commencing such a civil action and pursuant to rules of practice and procedure adopted by the Labor Commissioner, the commissioner shall provide notice of the investigation to each guarantor and employee, issue findings and an assessment of the amount of wages due, hold a meet-and-confer conference with the guarantors and employees to attempt to resolve the matter, and provide for a hearing.
(k) Except as expressly provided in this section, this section shall not be deemed to create any new right to bring a civil action of any kind for unpaid minimum wages, overtime pay, penalties, wage assessments, attorney’s fees, or costs against a registered garment manufacturer based on its use of any contractor that is also a registered garment manufacturer.
(l) The payment of the wage guarantee provided in this section shall not be used as a basis for finding that the registered garment manufacturer making the payment is a joint employer, coemployer, or single employer of any employees of a contractor that is also a registered garment manufacturer.
(m) The Labor Commissioner may, in his or her discretion, revoke the registration under this part of any registrant that fails to pay, on a timely basis, any wages awarded pursuant to this section, after the award has become final.

SEC. 3.

 Section 2675 of the Labor Code is amended to read:

2675.
 (a) For purposes of enforcing this part and Sections 204, 209, 212, 221, 222, 222.5, 223, 226, 227, and 227.5, Chapter 2 (commencing with Section 300) and Article 2 (commencing with Section 400) of Chapter 3 of Part 1 of this division, Sections 1195.5, 1197, 1197.5, and 1198, Division 4 (commencing with Section 3200) and Division 4.7 (commencing with Section 6200), every person engaged in the business of garment manufacturing, shall register with the commissioner.
The commissioner shall not permit any person to register, nor shall the commissioner allow any person to renew registration, until all the following conditions are satisfied:
(1) The person has executed a written application therefor in a form prescribed by the commissioner, subscribed and sworn by the person, and containing:
(A) A statement by the person of all facts required by the commissioner concerning the applicant’s character, competency, responsibility, and the manner and method by which the person proposes to engage in the business of garment manufacturing if the registration is issued.
(B) The names and addresses of all persons, except bona fide employees on stated salaries, financially interested, either as partners, associates, or profit sharers, in the proposed business of garment manufacturing together with the amount of their respective interests, except that in the case of a publicly traded corporation a listing of principal officers shall suffice.
(2) The commissioner, after investigation, is satisfied as to the character, competency, and responsibility of the person.
(3) In the case of a person who has been cited and penalized within the prior three years under this part, the person has deposited or has on file a surety bond in the sum and form that the commissioner deems sufficient and adequate to ensure future compliance, not to exceed five thousand dollars ($5,000). The bond shall be payable to the people of California and shall be for the benefit of any employee of a registrant damaged by the registrant’s failure to pay wages and fringe benefits, or for the benefit of any employee of a registrant damaged by a violation of Section 2677.5.
(4) The person has documented that a current workers’ compensation insurance policy is in effect for the employees of the person seeking registration.
(5) The person has paid an initial or renewal registration fee to the commissioner. The fee for initial registration and for each registration renewal shall be established in an amount determined by the Labor Commissioner to be sufficient to defray the costs of administering this part and shall be based on the applicant’s annual volume, but shall be not less than two hundred fifty dollars ($250) and shall be not more than one thousand dollars ($1,000) for contractors and two thousand five hundred dollars ($2,500) for all other registrants.
(b) At the time a certificate of registration is originally issued or renewed, the commissioner shall provide related and supplemental information regarding business administration and applicable labor laws. This related and supplemental information, as much as reasonably possible, shall be provided in the primary language of the garment manufacturer. The information shall include all subject matter on which persons seeking registration are examined pursuant to subdivision (c), and shall be available to persons seeking registration prior to taking this examination.
(c) Effective January 1, 1991, persons seeking registration under this section for the first time, and persons seeking to renew their registration pursuant to subdivision (f), shall comply with all of the following requirements:
(1) Demonstrate, by an oral or written examination, or both, knowledge of the pertinent laws and administrative regulations concerning garment manufacturing as the commissioner deems necessary for the safety and protection of garment workers.
(2) Demonstrate, by an oral or written examination, or both, knowledge of state laws and regulations relating to occupational safety and health which shall include, but not be limited to, the following:
(A) Section 3203 of Title 8 of the California Code of Regulations (Injury Prevention Program).
(B) Section 3220 of Title 8 of the California Code of Regulations (Emergency Action Plan).
(C) Section 3221 of Title 8 of the California Code of Regulations (Fire Prevention Plan).
(D) Section 6151 of Title 8 of the California Code of Regulations which provides for the placement, use, maintenance, and testing of portable fire extinguishers provided for the use of employees.
(3) Sign a statement which provides that he or she shall do all of the following:
(A) Comply with those regulations specified in paragraph (2) which establish minimum standards for securing safety in all places of employment.
(B) Ensure that all employees are made aware of the existence of these regulations and any other applicable laws and are instructed in how to implement the Injury Prevention Program, Emergency Action Plan, and Fire Prevention Plan, specified in paragraph (2), in the workplace.
(C) Ensure that all employees are instructed in the use of portable fire extinguishers.
(D) Post the Injury Prevention Program, Emergency Action Plan, and Fire Prevention Plan, specified in paragraph (2), in a prominent location in the workplace.
(d) The Division of Occupational Safety and Health shall assist the Division of Labor Standards Enforcement in developing the examination which shall include, but not be limited to, the state’s occupational safety and health laws specified in paragraph (2) of subdivision (c).
(e) The commissioner shall charge a fee to persons taking the examinations required by subdivision (c) which is sufficient to pay for costs incurred in administering the examinations.
(f) A person seeking renewal of registration shall be required to take both of the examinations, and sign the statement, specified in subdivision (c). However, once a renewal of registration has been granted based on these examinations, subsequent examinations shall only be required at the discretion of the commissioner if, in the preceding year, the registrant has been found to be in violation of subdivision (a) or any of the sections enumerated in that subdivision.
(g) Proof of registration shall be by an official Division of Labor Standards Enforcement registration form. Every person, as set forth in Section 2671, shall post the registration form where it may be read by employees during the workday.
(h) At least 90 days prior to the expiration of each registrant’s registration, the commissioner shall mail a renewal notice to the last known address of the registrant. The notice shall include all necessary application forms and complete instructions for registration renewal. However, omission of the commissioner to provide notice in accordance with this subdivision shall not excuse a registrant from making timely application for renewal of registration, shall not be a defense in any action or proceeding involving failure to renew registration, and shall not subject the commissioner to any legal liability under this section.

SEC. 4.

 Section 2675.5 of the Labor Code is amended to read:

2675.5.
 (a) The commissioner shall deposit seventy-five dollars ($75) of each registrant’s annual registration fee, required pursuant to paragraph (5) of subdivision (a) of Section 2675, into one separate account. Funds from the separate account shall be disbursed by the commissioner only to persons determined by the commissioner to have been damaged by the failure to pay wages and benefits by any garment manufacturer, jobber, contractor, or subcontractor after exhausting a bond, if any, to ensure the payment of wages and benefits. Any disbursed funds subsequently recovered by the commissioner shall be returned to the separate account.
(b) The remainder of each registrant’s annual registration fee not deposited into the special account pursuant to subdivision (a) shall be applied to costs incurred by the commissioner in administering the provisions of Section 2675 and this section.

SEC. 5.

 Section 2677 of the Labor Code is amended to read:

2677.
 (a) Any person engaged in the business of garment manufacturing who contracts with any other person similarly engaged who has not registered with the commissioner or does not have a valid bond on file with the commissioner, as required by Section 2675, shall be deemed an employer, and shall be jointly liable with such other person for any violation of Section 2675 and the sections enumerated in that section.
(b) Any employee of a person or persons engaged in garment manufacturing who are not registered as required by this part may bring a civil action against any person deemed to be an employer pursuant to subdivision (a) to recover any wages, damages, or penalties to which the employee may be entitled because of a violation by the unregistered person or persons of any provision specified in subdivision (a) of Section 2675, or may file a claim with the Labor Commissioner pursuant to Section 2673.1. In any civil action brought pursuant to this subdivision, the court shall grant a prevailing plaintiff’s reasonable attorney’s fees and costs.

SEC. 6.

 Section 2680 of the Labor Code is amended to read:

2680.
 (a) Any garment or wearing apparel, assembled or partially assembled by or on behalf of any person who has not complied with the registration requirements of this part, may be confiscated by the Division of Labor Standards Enforcement. Garments and wearing apparel confiscated pursuant to this section shall be placed in the custody of the division, which shall be charged with the responsibility of destroying or disposing of them pursuant to regulations adopted under Section 2672, provided that the goods shall not enter the mainstream of commerce and shall not be offered for sale. The division shall, by registered mail and telephone, give notice of the removal and the location where the confiscated goods are held in custody to the known manufacturer and contractor.
(b) If the person from whom garments or wearing apparel are confiscated pursuant to subdivision (a) was providing the confiscated garments or wearing apparel as a contractor and has previously, within the immediately preceding five-year period, had garments or wearing apparel confiscated pursuant to subdivision (a), the Labor Commissioner may, in addition to the remedies set forth in subdivision (a), confiscate the means of production, including all manufacturing equipment and the property where the current unregistered garment manufacturing operations have taken place. This subdivision does not apply where nonregistration of the contractor was due to delayed renewal of registration.
(c) The proceeds from the sale of any equipment or property under subdivision (b) shall be deposited into a single account in the General Fund, to be known as the Back Wages and Taxes Account. At the Labor Commissioner’s discretion, and upon appropriation by the Legislature, funds from that account may be disbursed to pay back wages owed to garment workers, including, but not limited to, workers of the unregistered contractor whose violation caused the confiscation, and for the payment of taxes.

SEC. 7.

 Section 2684 is added to the Labor Code, to read:

2684.
 (a) The Legislature finds and declares that persons who are primarily engaged in sewing or assembly of garments for other persons engaged in garment manufacturing frequently close down their sewing shops to avoid paying their employees’ wages and subsequently reopen under the conditions described in subdivision (b), and are more likely to do so than are other types of persons engaged in garment manufacturing.
(b) A successor to any employer that is primarily engaged in sewing or assembly of garments for other persons engaged in the business of garment manufacturing, as defined by subdivision (b) of Section 2671, that owes wages to the predecessor’s former employee or employees is liable for those wages if the successor meets any of the following criteria:
(1) Uses substantially the same facilities or work force to produce substantially the same products for substantially the same type of customers as the predecessor employer.
(2) Shares in the ownership, management, control of labor relations, or interrelations of business operations with the predecessor employer.
(3) Has in its employ in a managerial capacity any person who directly or indirectly controlled the wages, hours, or working conditions of the affected employees of the predecessor employer.
(4) Is an immediate family member of any owner, partner, officer, or director of the predecessor employer or of any person who had a financial interest in the predecessor employer.
This section does not impose liability upon a successor for the guarantee of unpaid minimum wages and overtime compensation set forth in subdivision (a) or (b) of Section 2673.1.

SEC. 8.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.