Fashion Business Inc - FBI Files by Robin Cornwall

FBI Files by Robin Cornwall

State law AB633 has proven to be a burden on apparel manufacturers by making them accept contingent liability for worker wages and benefits that may not have been paid by a contractor before it went out of business. While this has substantially changed the “playing field’ for California manufacturers, it appears that state regulators now wish to extend this contingent liability to the retailers themselves. The California Apparel News recently reported that state regulators are looking to further define AB633 and to write into the law so that under certain circumstances a retailer can come under the jurisdiction of AB633. Though retailers normally have no say in which contractors are use to construct the actual garments, it appears that regulators want to be able to look to the retailer’s “deep pockets” for the payment of wages

AB633 has put California based apparel manufacturers at a competitive disadvantage in terms of the contingent liability they now have when dealing with contractors. At the present time though, retailers are not affected by the provisions of this law. A change in AB633 that places contingent liability upon the shoulders of the retailers could prove devastating for the entire California apparel industry.

Los Angeles is now considered the number one apparel market in the country. Should AB633 be successfully changed, it can be expected that LA will again be overshadowed by New York (which does not have a law that is dangerous to retailers). The FBI works to make LA based manufacturers aware of such far reaching legislation and to help businesses determine the possible impact upon their ventures.

First Published 1/24/05