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Onetime Fashion Nova Subcontractor Banked PPP Loan While Stiffing Workers

A Los Angeles-based apparel manufacturer that supplied garments to one of Fashion Nova’s contract factories not only committed overtime violations against its workforce, according to the U.S. Department of Labor Wage and Hour Division (WHD), but did so while banking government funds.

Now, the company is being forced to pay up.

Sew Nice Inc., a garment producer for L.A. manufacturer Annabelle, which supplies Fashion Nova, was found guilty of perpetuating wage theft, and is being held accountable financially, WHD said. What’s more, documents show Sew Nice received a $4,200 Paycheck Protection Program loan in April last year—during the period of WHD’s investigation, which wrapped up on Sept 1. after starting in May of 2019.

Investigators said the contractor violated the Fair Labor Standards act by paying some employees using a piece-rate model below California’s minimum wage, and failed to pay them the required overtime when they worked more than 40 hours—a standard work week.

What’s more, the employer violated record-keeping requirements, neglecting to keep a log of all wages, some of which were paid to workers in cash. The company did not keep accurate documentation of employees work hours, they added, and failed to maintain satisfactory payroll records for a number of months.

The WHD’s investigation and the details it unearthed will cost Sew Nice Inc. $5,846 in back wages to 10 employees, and the garment contractor will also be compelled to pay $3,485 in penalties due to the “willful nature” of its violations.

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“These vulnerable workers deserve to receive every penny of their hard-earned wages, and the Wage and Hour Division remains committed to ensuring that happens,” said Rafael Valles, the WHD’s assistant district director in West Covina, Calif.

“Our work in this industry continues, and aims to prevent employers from short-changing employees, ignoring the overtime pay requirements and gaining an unfair competitive advantage over those employers who play by the rules,” he added, noting that workers facing similar circumstances are encouraged to file confidential complaints against employers. Labor laws will be enforced regardless of workers’ immigration status, he said, and agents are available to speak with callers in more than 200 languages.

According to the DOL, Annabelle, the manufacturer that contracted the work, supplies “several retailers” like Fashion Nova. The brand’s bold array of new styles at impossibly low prices have made it a favorite among the Gen Z set. High-profile celebrity endorsements from stars like Cardi B and Kylie Jenner have also catapulted the online shop to household name status, despite rumblings of worker rights abuses in its supply chain.

However, Fashion Nova has severed ties with Sew Nice.

“We have a vigorous audit process with all of our domestic vendors and following a regularly scheduled in-depth subcontractor audit of Sew Nice, Inc., Fashion Nova discontinued all domestic business with the vendor that contracted with that company in February 2021,” the company told Sourcing Journal on Thursday. “Fashion Nova is committed to protecting the rights of garments workers and mandates that all contractors and subcontractors pay their workers the applicable minimum wage and be compliant with all relevant labor laws.”

The fast-fashion retailer “also actively takes steps to ensure that its subcontractors comply with this mandate, including regularly conducting independent in-depth audits, and holding them accountable by imposing serious consequences when they fail to do so.”

A DOL spokesperson said Sew Nice agreed to ensure that all employees record their hours of work, committed to paying workers “completely via check,” and pledged time-and-a-half compensation for work beyond the standard 40 hours.

Meanwhile, California’s Garment Worker Protection Act (SB-62) continues to wind its way through legislative channels on a path toward a final vote by the Senate Appropriations Committee. In April, the bill, which reprised proposed worker rights measures from failed SB-1399, passed the Senate Judiciary Committee.

The bill was designed to close loopholes that allow for the perpetuation of wage theft, and includes proposals for establishing “upstream liability” that would hold suppliers like Annabelle responsible for wages, damages and penalties, preventing them from shirking blame by pointing the finger solely at contractors like Sew Nice. The bill also seeks to eliminate the piece-rate wage structure, ensuring that garment workers are paid state-mandated minimum hourly wages instead.