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Wage Theft in US Garment Industry is Worse Than We Thought

Wage theft has been a problem that has long plagued California’s garment industry. It’s one of the reasons, after all, that labor campaigners battled so fervently to pass Senate Bill 62, better known as the Garment Worker Protection Act, eliminating the piece-rate system and putting fashion brands on the hook for unpaid wages and other forms of worker exploitation.

But the issue extends beyond the Golden State’s borders, according to a recent study by the Center for Public Integrity. The U.S. cut-and-sew sector, in fact, is responsible for the second-highest rate of federal wage-violation cases, the Washington, D.C.-based watchdog group said. Much of this has to do with demographics. Nationally, 16 percent of workers in the United States were born overseas. With 42 percent of its 265,000-plus workers foreign-born, the garment industry has nearly triple that figure.

“Immigrants are among the workers most vulnerable to wage theft,” the Center for Public Integrity said. Other industries with large numbers of both immigrant workers and wage-theft problems include agriculture, building maintenance, hotel work and other food services.

In an analysis of Labor Department data from 2010 to 2020, the organization uncovered more than $5.8 million in owed wages from just 30 companies with 100 workers or more. All but three hailed from California, which boasts the largest concentration of garment workers in the United States. Much of the industry is centered in downtown Los Angeles, where 45,000 workers across 2,000 facilities pump out $5 billion in clothing and footwear every year. Some of the biggest offenders on the list include San Francisco’s Wins of California, which owed $933,478 in back wages to 248 workers; Huntington Beach’s Down N Dirty Inc., which owed $647,637 to 168 workers; and Lowell, Mass.’s Unwrapped, which owed $445,011 to 328 workers.

Fashion Nova made headlines in 2019 after a Labor Department investigation found that its suppliers owed hundreds of workers a total of $3.8 million in back pay. The fast-fashion retailer neither owned its own factories nor did it deal directly with those it contracted, it said at the time. Federal law doesn’t penalize brands for wage theft in factories if they can credibly claim ignorance about labor conditions because of the middlemen they hire. SB 62 will now hold them jointly liable in California, no matter how many layers of subcontracting are involved.

Labor campaigners say that many garment workers are Latino immigrants who are either undocumented or don’t speak fluent English, so they seldom file wage claims or otherwise seek restitution. Immigrant workers are also more likely to experience employer intimidation and other unlawful acts because they’re uncertain of their rights or they fear retaliation. SB 62, which was signed into law by Governor Gavin Newsom in October, was viewed by many as nothing short of historic, not only for labor rights but for immigrant rights as well.

“California is holding corporations accountable and recognizing the dignity and humanity of our workers, who have helped build the fifth-largest economy in the world,” Newsom said at the time. “These measures protect marginalized low-wage workers, many of whom are women of color and immigrants, ensuring they are paid what they are due and improving workplace conditions.”

But not everyone’s a fan of the legislation. More than a dozen business groups, including the California Chamber of Commerce and the California Retailers Association, have labeled the Garment Worker Protection Act as a “job killer” that will force businesses to flee California en-masse for less-restrictive shores. More than a hundred brands and retailers, including Boyish Jeans, Christy Dawn and Reformation, however, have since hit back, insisting that “sweatshops will not come to an end” until brands are jointly liable.

“The sustainable business community wants a level playing field, enabled by strong labor laws, because we believe it is crucial for California fashion to flourish well into the 21st century,” they wrote in an open letter in July. “SB 62 is right for the fashion businesses of California. SB 62 proposes grounded, sensible solutions to the shameful wage theft that exists in our industry by proposing to expand liability along the entire supply chain, closing loopholes that have long allowed brands to enjoy tremendous bargaining power with their suppliers but none of the liability.”

And if SB 62 is right for California, why not the rest of the fashion industry, both at home and overseas, particularly in the wake of Covid-19? One July analysis of 2,100 workers in Bangladesh, Cambodia, Indonesia, India, Pakistan and Sri Lanka found a cumulative wage loss of $157 million since the start of the pandemic. Worker organizations such as the Asia Floor Wage Alliance have also called for “joint employer liability” to hold brands such as H&M, Levi Strauss and Tommy Hilfiger responsible for wage theft.

“The criticism around the bill’s joint liability raises awareness about the industry-wide change that is desperately needed around improving purchasing practices, so that brands take accountability and actually support suppliers in providing decent working conditions,” Carrie Freiman Parry, Reformation’s director of sustainability, previously told Sourcing Journal. “SB 62 is an opportunity for the industry, brands and the government to come together and create a race to the top to protect workers throughout the supply chain.”

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