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SB-1399 Employment: garment manufacturing.(2019-2020)

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Date Published: 05/19/2020 09:00 PM
SB1399:v97#DOCUMENT

Amended  IN  Senate  May 19, 2020
Amended  IN  Senate  April 08, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1399


Introduced by Senator Durazo
(Principal coauthor: Assembly Member Gonzalez)

February 21, 2020


An act to amend Sections 2670, 2671, 2673, 2673.1, 2675.5, and 2677 of, and to add Sections 2675.7 and 2675.8 to, of the Labor Code, relating to employment.


LEGISLATIVE COUNSEL'S DIGEST


SB 1399, as amended, Durazo. Employment: garment manufacturing.
Existing law makes garment manufacturers liable for guaranteeing payment of wages to employees of their contractors.
This bill would expand the definition of garment manufacturing to include dying, altering a garment’s design, and affixing a label on a garment. The bill would prohibit any employee engaged in the performance of garment manufacturing to be paid by the piece or unit, or by piece rate, except as specified.
This bill would define “brand guarantor” for purposes of these provisions as a person contracting for the performance of garment manufacturing, as specified, regardless of whether the person with whom they contract performs manufacturing operations or hires a contractor or subcontractor to perform manufacturing operations. This bill would specify that a person who is engaged in garment manufacturing who contracts with a another person for the performance of garment manufacturing operations shares joint and several liability with a contractor and a brand guarantor for all civil legal responsibility and liability for all workers employed by the contractor. The bill would also require those parties to guarantee the payment of unpaid minimum wages, overtime pay, break premiums, and other damages and penalties, and to guarantee failure to secure valid workers’ compensation coverage, as specified.
This bill would create a rebuttable presumption in a claim filed with the Labor Commissioner to recover unpaid wages, if an employee has provided the Labor Commissioner with labels from a brand guarantor or garment manufacturer, that the brand guarantor or garment manufacturer is a guarantor with respect to the claim, as specified. The bill would also give any employee who has experienced a violation of these provisions a private right of action against a brand guarantor, garment manufacturer, contractor, or subcontractor for unpaid minimum wages, overtime pay, break premiums, liquidated damages, and other penalties and fees, as specified. The bill would also give the Labor Commissioner authority to enforce these provisions by issuing a stop order or a citation.
Existing law requires every employer engaged in the business of garment manufacturing to keep certain records for three years, including, among other things, contract worksheets indicating the price per unit agreed to between the contractor and manufacturer.
This bill would also require every employer engaged in the business of garment manufacturing to keep all contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation pursuant to which work was, or is being, performed for three years.

Existing law makes any person engaged in the business of garment manufacturing who is not registered with the Labor Commissioner guilty of a misdemeanor.

This bill would prohibit the commissioner from permitting a person engaged in garment manufacturing or contracting from registering until the person has obtained a surety bond in an amount based upon the number of employees engaged in garment manufacturing, as specified, for the benefit of an employee damaged by their employer’s failure to pay minimum wages, overtime pay, break premiums, liquidated damages, or other penalties. Because the bill would expand the definition of garment manufacturing, the bill would change the definition of a crime, thereby imposing a state-mandated local program. The bill would also require a brand guarantor to file a bond with the commissioner in order to do business in the state, as specified. The bill would make failure to maintain a bond as required by these provisions punishable by a civil fine of $100 for each calendar day that the person engaged in garment manufacturing or contracting without a valid bond.

Existing law requires the commissioner to deposit $75 of each garment manufacturer’s registration fee into a separate account to 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 a garment manufacturer, contractor, or subcontractor. Existing law requires the commissioner to promulgate all regulations and rules necessary to carry out the provisions of this part. The commissioner, upon good cause, may impose, in their discretion, the terms of penalties, the revocation of registrations, and the confiscation or disposal of goods in accordance with those rules and regulations.
This bill would name the separate account into which a portion of a garment manufacturer’s registration fee is deposited the Garment Manufacturers Special Account. The bill would require the Labor Commissioner to determine which claims for payment from the Garment Manufacturer’s Special Account are accepted, and the amount of money, if any, that is to be disbursed from the account on an accepted claim claim, based upon consideration of specified information, including, among other things, the claimant’s declaration under penalty of perjury containing information about attempts made by the employee or their representative to satisfy the claim and collect the recovery from the employer and the employer’s surety bond. bond, if any. Because this bill would expand the crime of perjury, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares all of the following:
The garment industry in California is rife with violations of minimum wage law, overtime laws, and health and safety standards. California has the highest concentration of garment industry workers in the country.
Proper payment of wages, and paid time to wash hands or to disinfect work stations, to California’s garment workers and every Californian is of vital importance to the welfare of our entire state, especially during the COVID-19 public health crisis in which many Californians are experiencing financial distress through no fault of their own.
So-called retailers contract with a network of manufacturers and subcontractors to produce their garments and dictate the pricing structure that causes wage violations. This leads to a vicious price competition, resulting in garment workers being paid an average of $5.15 per hour, well below minimum wage.
In 1999, Assembly Bill 633 (Chapter 554 of the Statutes of 1999) (AB 633) authored by then Assembly Member Steinberg, was enacted with the purpose of preventing wage theft in the garment industry and creating access to justice for victims. Some retailers and manufacturers have spent the last 20 years finding ways to circumvent this law in order to avoid liability, resulting in thousands of garment workers in California being unable to recover their stolen wages.
These so-called retailers have frustrated the law, avoiding liability for this systemic abuse, by creating layers of subcontracting, which has enabled them to claim that they do not fall under the definition of “garment manufacturer,” as defined in AB 633, and are therefore not liable for these egregious wage violations. The intent of AB 633 must be restored, and upstream liability established, or the unrelenting problem of wage theft in the garment industry will continue.
Adding to this problem is the peculiar way in which garment workers are paid—by the piece. Not only does utilizing the piece rate enable, and even justify, subminimum wage, but it also creates unsafe working conditions, as garment workers are constantly working quickly to complete as many items as possible.
COVID-19 has had a devastating impact on the garment industry, and its vulnerable workforce. Workers have lost their job and all prospects for income almost overnight, due to Safer at Home Orders, and the closure of all nonessential businesses. In response to these orders, most fashion brands canceled contracts with local manufacturers, sometimes without paying for current orders, and with no regard for the impact to garment workers. Workers were left without paid leave, severance, and in some instances, without final wages. The majority of workers are undocumented and ineligible for unemployment benefits or federal stimulus aid.
Workers are working behind locked doors and shuttered windows for apparel factories that are violating Safer at Home Orders. Without sanitization, these factories are endangering workers’ health while paying sweatshop wages. The fashion brands still contracting for this production are complicit in the exposure of workers to coronavirus infection and the violation of workers’ wage rights. Workers are forced to choose between loss of all wages or exposure to the virus.
Workers are working in factories that are making nonmedical personal protective equipment (PPE), such as face masks and medical gowns. Most of these factories are taking only minimal measures to protect workers’ health and continue to pay workers subminimum wages by the piece rate, despite the essential and important nature of their labor. While some of this production is purchased by health care systems and companies with frontline workers, some of this production is for fashion brands shifting their product to masks or medical scrubs for individual sale. Just as with apparel production, they are complicit in exposing workers to infection and violating workers’ wage rights, and workers are forced to choose between loss of all wages or exposure to the virus.
Workers paid by a piece rate lose income when they take breaks, and are often reprimanded by their managers for doing so. This is especially concerning when frequent handwashing is necessary to prevent the spread of COVID-19 and a clear obstacle to workers performing this necessary health safeguard.

SECTION 1. SEC. 2.

 Section 2670 of the Labor Code is amended to read:

2670.
 (a) It is the intent of the Legislature to restore the purpose of AB 633 (Chapter 554 of the Statutes of 1999) to prevent wage theft against garment workers by clarifying ambiguities in the original language. AB 633 sought to ensure that persons who contracted to have garments manufactured were liable as guarantors for the unpaid wages and overtime of the workers making their garments.
Several manufacturers, however, have attempted to avoid liability as a guarantor by adding layers of contracting between themselves and the employees manufacturing the garments. This undermines the purpose of AB 633 because manufacturers have no incentive to ensure safe conditions or the proper minimum wage and overtime payments for the workers producing their garments if they do not face guarantor liability.
This act, therefore, revises this part to make clear that a person contracting to have garments made is liable for unpaid minimum wage and overtime pay to the workers who manufacture those garments regardless of how many layers of contracting that person may use.
AB 633 was also designed to ensure that underpaid, and unpaid, garment workers would be able to recoup their stolen wages, even when factories shut down, declared bankruptcy, or otherwise shirked their obligations to lawfully pay their workers. In order to make sure that these workers were made whole, AB 633 required that a portion of garment manufacturers’ annual registration or renewal fees be deposited into a fund. However, in the last 20 years, registration and renewal fees have remained frozen in place, while minimum wage and worker claims have risen steadily, meaning the revenues flowing into the fund have not kept up with the demands on the fund. As a result, workers who have already proven that they are owed stolen wages are on a waiting list, waiting anywhere from 5 to 20 years, to be paid. While the Legislature recently passed a budget with a one-time appropriation of funds temporarily eliminating the waiting list, structural change is necessary in order to permanently eliminate the hardship placed on garment workers who are unable to recoup their stolen wages within a reasonable amount of time.

Accordingly, this act amends this part to include a requirement that garment manufacturers and contractors obtain surety bonds to ensure that garment workers are able to recover their stolen wages.

(b)  By restoring the original intent of this part, the Legislature will be able to more effectively establish and regulate a system of registration, penalties, confiscation, bonding requirements, and misdemeanors for the imposition of prompt and effective criminal and civil sanctions against violations of, and especially patterns and practices of violations of, any of the laws as set forth herein and regulations of this state applicable to the employment of workers in the garment industry. The civil penalties provided for in this part are in addition to any other penalty provided by law. This part shall be deemed an exercise of the police power of the state for the protection of the public welfare, prosperity, health, safety, and peace of the people of the State of California. Nothing herein shall prohibit a local municipality from enacting its own protections for workers employed in the garment industry, so long as those protections are equal to, or in addition to, the protections provided herein.

SEC. 2.SEC. 3.

 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 oneself, 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 their sole compensation; or any person as provided by regulation.
(b) “Garment manufacturing” means sewing, cutting, making, processing, repairing, finishing, assembling, dying, altering a garment’s design, causing another person to alter a garment’s design, affixing a label on a garment, 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) “Brand guarantor” means any person contracting for the performance of garment manufacturing, including sewing, cutting, making, processing, repairing, finishing, assembling, dying, altering a garment’s design, causing another person to alter a garment’s design, affixing a label on a garment, 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 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, regardless of whether the person with whom they contract performs the manufacturing operations or hires contractors or subcontractors to perform the manufacturing operations.
(d) “Commissioner” means the Labor Commissioner.
(e) “Contractor” means any person who, with the assistance of employees or others, is primarily engaged in sewing, cutting, making, processing, repairing, finishing, assembling, dying, altering a garment’s design, causing another person to alter a garment’s design, affixing a label on a garment, 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. 3.SEC. 4.

 Section 2673 of the Labor Code is amended to read:

2673.
 Every employer engaged in the business of garment manufacturing shall keep accurate records for three years which show all of the following:
(a) The names and addresses of all garment workers directly employed by such person.
(b) The hours worked daily by employees, including the times the employees begin and end each work period.
(c) The daily production sheets, including piece rates.
(d) The wage and wage rates paid each payroll period.
(e) The contract worksheets indicating the price per unit agreed to between the contractor and manufacturer.
(f) All contracts, invoices, purchase orders, work orders, style or cut sheets, and any other documentation pursuant to which work was, or is being, performed. This documentation shall include the names and contact information of the contracting parties.
(g) The ages of all minor employees.
(h) Any other conditions of employment.

SEC. 4.SEC. 5.

 Section 2673.1 of the Labor Code is amended to read:

2673.1.
 (a) To ensure that employees are paid for all hours worked, an employee engaged in the performance of garment manufacturing, as defined in subdivision (b) of Section 2671, shall not be paid by the piece or unit, or by piece rate. Nothing in this section shall be deemed to prohibit incentive-based bonuses. This section shall not apply to workplaces where employees are covered by a bona fide collective bargaining agreement, or other enforceable agreement, if the agreement expressly provides for wages, hours of work, working conditions, stewards or monitors, and a process to resolve disputes concerning nonpayment of wages.
(b) (1) To ensure that employees are paid for all hours worked, a person engaged in garment manufacturing, as defined in subdivision (b) of Section 2671, who contracts with another person for the performance of garment manufacturing operations shall jointly and severally share with a contractor, as defined in subdivision (e) of Section 2671, and brand guarantor, as defined in subdivision (c) of Section 2671, all civil legal responsibility and civil liability for all workers employed by that contractor, and shall guarantee, both of the following:
(A) The payment of the unpaid minimum wages, overtime pay, break premiums, liquidated damages, and any other penalties, and attorney’s fees.
(B) Failure to secure valid workers’ compensation coverage as required by Section 3700.
(2) Nothing in this section shall prevent or prohibit two or more parties, who are held jointly and severally liable under this section after a final judgment is rendered by the court, from establishing, exercising, or enforcing, by contract or otherwise, any lawful or equitable remedies, including, but not limited to, a right of contribution and indemnity against each other for liability created by acts of the other.
(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 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 liability. The investigation shall include, but not be limited to, interviewing the employee and their witnesses and making a finding and assessment of back wages due, if any, to the employee. If an employee provides the Labor Commissioner with labels, or the equivalent thereto, from a brand guarantor or garment manufacturer, there shall be a presumption that the brand guarantor or garment manufacturer is a guarantor with respect to the claim. An employee’s claim of hours worked, back wages due, and the identity of guarantors shall be presumed valid and shall be the Labor Commissioner’s assessment, unless the brand guarantor, garment manufacturer, contractor, or subcontractor 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, evidence of the precise hours worked by the employee for each pay period during the period of the claim, and evidence, including a purchase order or invoice relating to the guarantor for whom work was performed. In the absence of the provision of accurate and contemporaneous records pursuant to subdivision (d) of Section 1174 or Section 2673, written or oral declarations from a brand guarantor, garment manufacturer, or contractor is not sufficient to rebut the presumption of liability. 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 their findings and assessment of the amount of wages owed 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. If an employee has provided the Labor Commissioner with labels, or the equivalent thereto, from a brand guarantor or garment manufacturer, there shall be a presumption that the brand guarantor or garment manufacturer is a guarantor with respect to the claim. An employee’s claim of hours worked, back wages due, and identity of guarantors, shall be presumed valid and shall be the Labor Commissioner’s assessment, unless the brand guarantor, garment manufacturer, contractor or subcontractor 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, or evidence, including purchase orders or invoices relating to the guarantor for whom work was performed. In the absence of the provision of accurate and contemporaneous records pursuant to subdivision (d) of Section 1174 or Section 2673, a written declaration from a brand guarantor, garment manufacturer, or contractor will not be deemed sufficient to rebut the presumption of liability. 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. Any party may present evidence at the hearing to support or rebut the proposed findings, however, written declarations from a brand guarantor, garment manufacturer, or contractor will not be deemed sufficient to rebut the presumption of liability. 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, 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 (b) shall be liable for 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 attorney’s fees and costs awarded to an employee.
(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 their 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) Any employee who has experienced a violation of this code shall have a private right of action 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, break premiums, liquidated damages, and any other penalties, wage assessments, attorney’s fees, or costs against a brand guarantor, garment manufacturer, contractor, or subcontractor.
(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 their 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.
(n) The Labor Commissioner may also enforce this section by issuing stop orders or citations. The procedures for issuing, contesting, and enforcing judgments for citations issued by the Labor Commissioner under this section shall be the same as those set forth in subdivisions (b) through (k), inclusive, of Section 1197.1.

SEC. 5.SEC. 6.

 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 a separate account known as the Garment Manufacturers Special Account. Funds from the Garment Manufacturers Special 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, brand guarantor, contractor, or subcontractor.
(1) In making these determinations, the Labor Commissioner shall disburse amounts from the fund to ensure the payment of wages and benefits, interest, and any damages or other monetary relief arising from the violation of orders of the Industrial Welfare Commission or from a violation of this code, including statutory penalties recoverable by an employee, determined to be due to a garment worker by a registered or unregistered garment business.
(2) A disbursement shall be made pursuant to a claim for recovery from the fund in accordance with procedures prescribed by the Labor Commissioner.
(3) Any disbursed funds subsequently recovered by the Labor Commissioner, pursuant to an assignment of the claim to the commissioner for recovery, including recovery from a surety under a bond pursuant to Section 2675, or otherwise recovered by the Labor Commissioner from a liable party, shall be returned to the Garment Manufacturers Special Account.
(b) The remainder of each registrant’s annual registration fee not deposited into the Garment Manufacturers Special Account to subdivision (a) shall be deposited in a subaccount and applied to costs incurred by the commissioner in administering the provisions of Section 2673.1, Section 2675, and this section, upon appropriation by the Legislature.
(c) (1) The Labor Commissioner shall determine whether a claim is accepted, and the amount of money, if any, is to be disbursed from the Garment Manufacturers Special Account on an accepted claim. The commissioner shall make the determination based upon consideration of the information requested from the claimant specified in subdivision (d).
(2) An employee who has been damaged by an employer’s failure to pay wages, penalties, or other related damages, or a combination thereof, shall, before making a claim for payment from the Garment Manufacturers Special Account, attempt to collect the wages, penalties, or other related damages directly from the employer and the employer’s surety bond. bond, if any.
(d) An employee or their authorized representative seeking recovery of unpaid wages, penalties, or other related damages, or a combination thereof, shall submit a claim for payment from the Garment Manufacturers Special Account in writing to the Labor Commissioner. The claim itself need not be in any particular form, however, it must include all of the following information or be accompanied by the following documents:
(1) Name, United States Postal Service mailing address, and home telephone number of the employee for whom recovery is sought.
(2) The employee’s social security number or individual taxpayer identification number.
(3) The name, street address, and telephone number, if known, of the employer that failed to pay the employee their wages, penalties, or other related damages.
(4) The period of time during which the wages were earned, giving both the beginning and ending dates as month, day, and year.
(5) The number of hours worked or other basis for being paid wages.
(6) The promised rate of pay.
(7) The actual rate of pay.
(8) The amount of wages sought.
(9) The amount of penalty sought, if any, and the Labor Code section pursuant to which the penalty may be imposed.
(10) An itemization, description, and the amount of other related damages sought, if any.
(11) The amount of recovery sought less any amount recovered from the employer or the employer’s surety bond. bond, if any.
(12) The new amount of total recovery sought, if different from the amount in paragraph (11).
(13) Proof of damages actually suffered.
(14) A copy of the employee’s written assignment of the claim to the representative, if applicable.
(15) A declaration or affidavit under penalty of perjury containing information regarding attempts made by the employee or their representative to satisfy the claim by demand against the surety bond bond, if any, required to be held by the manufacturer, contractor, or brand guarantor by Labor Code Section 2675.7 or 2675.8, 2675, and the results of the demand. The declaration or affidavit must also disclose the attempts made to collect the recovery sought directly from the employer, and the results of the attempts. The employee’s representative may sign the declaration or affidavit required by this subdivision if the information submitted does not require the personal knowledge of the employee.
(e) The information required in paragraphs (3) to (13), inclusive, of subdivision (d) shall be provided in one of the following ways:
(1) Submission of a copy of a judgment obtained from a court or an award from the Labor Commissioner that was issued after a contested proceeding that contains all of the information in paragraphs (3) to (13), inclusive, of subdivision (d). If the judgment or award omits any of the required information, it shall be supplemented by a declaration under penalty of perjury that provides the missing information. The declaration shall be signed by the employee or the employee’s authorized representative, if the information submitted does not require the personal knowledge of the employee.
(2) Submission of a copy of a judgment obtained from a court or an award from the Labor Commissioner that was issued after an uncontested or default proceeding and a declaration under penalty of perjury that provides the information required in paragraphs (3) to (13), inclusive, of subdivision (d). The declaration must be signed by the employee or the employee’s authorized representative if the information submitted does not require the personal knowledge of the employee.
(3) Submission of a copy of a citation from the Labor Commissioner that is not subject to appeal and that contains all of the information in paragraphs (3) to (13), inclusive, of subdivision (d). If the citation omits any of the required information, it shall be supplemented by a declaration under penalty of perjury that provides the missing information. The declaration shall be signed by the employee or the employee’s authorized representative, if the information submitted does not require the personal knowledge of the employee.

(3)

(4) If no judgment has been obtained from a court or an award from the Labor Commissioner, submission of a declaration under penalty of perjury that contains all of the information required in paragraphs (3) to (13), inclusive, of subdivision (d). The declaration must be signed by the employee or the employee’s authorized representative if the information submitted does not require the personal knowledge of the employee.
(f) If the Labor Commissioner determines that a declaration required under this section is insufficient to sustain a recovery from the Garment Manufacturers Special Account because of lack of information, or reason to believe that the information submitted was inaccurate, incomplete, or false, the Labor Commissioner may order an investigatory hearing pursuant to subdivision (g).
(g) (1) The Labor Commissioner shall have the authority to order an investigatory hearing to determine the validity of a claim seeking recovery from the Garment Manufacturers Special Account, including the amount of any damages actually suffered by the employee, if any. Notice of a hearing shall be served on the employer and the employee either personally or by registered mail in accordance with the subdivision (c) of Section 11505 of the Government Code.
(2) The hearing shall be conducted by a deputy labor commissioner and may be held in the Division of Labor Standards Enforcement’s district office having jurisdiction of the geographic location where the nonpayment of wages allegedly occurred, or the Labor Commissioner may designate any other venue they deem appropriate.
(3) In the hearing, the employer and the employee shall have the opportunity to present evidence. The Labor Commissioner shall issue, serve, and enforce any necessary subpoenas.

SEC. 6.Section 2675.7 is added to the Labor Code, to read:
2675.7.

(a)The commissioner shall not permit a contractor or person engaged in garment manufacturing, as defined in subdivision (b) of Section 2671, to register, or to renew registration, until both of the following conditions are satisfied:

(1)The person engaged in garment manufacturing or contracting has obtained a surety bond issued by a surety company admitted to do business in this state.  The principal sum of the bond shall be as follows:

(A)Not less than one hundred fifty thousand dollars ($150,000) for garment manufacturers or contractors that employ ten or fewer workers engaged in garment manufacturing.

(B)Not less than three hundred thousand dollars ($300,000) for garment manufacturers or contractors that employ between 11 and 20 workers engaged in garment manufacturing.

(C)Not less than four hundred fifty thousand dollars ($450,000) for garment manufacturers or contractors that employ between 21 and 30 workers engaged in garment manufacturing.

(D)Not less than six hundred thousand dollars ($600,000) for garment manufacturers or contractors that employ 31 or more workers engaged in garment manufacturing.

(2)The person engaged in garment manufacturing or contracting shall file a copy of the bond with the commissioner.

(b)The bond required by this section shall be in favor of, and payable to, the people of the State of California, and shall be for the benefit of any employee damaged by their employer’s failure to pay minimum wages, overtime pay, break premiums, liquidated damages, or other penalties.

(c)(1)Thirty days before the cancellation or termination of a surety bond required by this section, the surety shall send written notice to both the person engaged in garment manufacturing or contracting and the commissioner that identifies the bond and the date of the cancellation or termination.

(2)A person engaged in garment manufacturing or contracting that had a bond canceled or terminated shall not conduct any business until the person obtains a new surety bond and files a copy of the bond with the commissioner.

(d)Failure to maintain the bond required by this section shall result in a civil fine of one hundred dollars ($100) for each calendar day, not to exceed ten thousand dollars ($10,000), that the person engaged in garment manufacturing or contracting engages in the business of garment manufacturing or contracting without a valid bond.

(e)This section shall not require a bond in favor of employees covered by a bona fide collective bargaining agreement, or other enforceable agreement, if the agreement expressly provides for wages, hours of work, working conditions, stewards or monitors, a process to resolve disputes concerning nonpayment of wages, and a waiver of the bond required by this section.

SEC. 7.Section 2675.8 is added to the Labor Code, to read:
2675.8.

(a)The commissioner shall not permit a brand guarantor, as defined in subdivision (c) of Section 2671, to conduct business in this state until both of the following conditions are satisfied:

(1)The brand guarantor has obtained a surety bond issued by a surety company admitted to do business in this state.  The principal sum of the bond shall be as follows:

(A)Not less than one hundred fifty thousand dollars ($150,000) for brand guarantors that employ ten or fewer workers engaged in garment manufacturing.

(B)Not less than three hundred thousand dollars ($300,000) for brand guarantors that employ between 11 and 20 workers engaged in garment manufacturing.

(C)Not less than four hundred fifty thousand dollars ($450,000) for brand guarantors that employ between 21 and 30 workers engaged in garment manufacturing.

(D)Not less than six hundred thousand dollars ($600,000) for brand guarantors that employ 31 or more workers engaged in garment manufacturing.

(2)The brand guarantor shall file a copy of the bond with the commissioner.

(b)The bond required by this section shall be in favor of, and payable to, the people of the State of California, and shall be for the benefit of any employee damaged by their employer’s failure to pay minimum wages, overtime pay, break premiums, liquidated damages, or other penalties.

(c)(1)Thirty days before the cancellation or termination of a surety bond required by this section, the surety shall send written notice to both the brand guarantor and the commissioner that identifies the bond and the date of the cancellation or termination.

(2)A brand guarantor that had a bond canceled or terminated shall not conduct any business until the person obtains a new surety bond and files a copy of the bond with the commissioner.

(d)Failure to maintain the bond required by this section shall result in a civil fine of one hundred dollars ($100) for each calendar day, not to exceed ten thousand dollars ($10,000), that the brand guarantor engages in the business of garment manufacturing or contracting without a valid bond.

(e)This section shall not require a bond in favor of employees covered by a bona fide collective bargaining agreement, or other enforceable agreement, if the agreement expressly provides for wages, hours of work, working conditions, stewards or monitors, a process to resolve disputes concerning nonpayment of wages, and a waiver of the bond required by this section.

SEC. 8.SEC. 7.

 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 that 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, or may file a claim with the Labor Commissioner pursuant to Section 2673.1, against any person deemed to be an employer to recover any unpaid minimum wages, overtime pay, break premiums, liquidated damages, and any other penalties, attorney’s fees, or costs to which the employee may be entitled.

SEC. 9.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.