Who pays the real cost for cheap clothes? Too often, the workers who make them

By Laurence Darmiento
Los Angeles Times

Los Angeles — The prices are hard to believe: $24.99 for an on-trend dress, delivered to your door. Or $9.99 for a silky camisole hanging from the rack at a discount chain.

But someone has to pay the real cost of those cheap clothes even if it’s not the American consumer, say labor advocates — who point to the thousands of immigrant workers who can sometimes toil for far less than the minimum wage in small Los Angeles apparel factories.

FILE - In this Aug. 8, 2017 photo,  Pablo Mendez Mendez, 48, says earns around $7 an hour as a sewing machine operator, where he works 11-hour-days.

Now, those advocates are proposing the industry’s biggest reforms in a generation, legislation that would turn the traditional pay structure on its head while holding online shops such as Fashion Nova and other retailers including Nordstrom responsible for any wage theft that occurs in the making of their apparel.

“If your clothes are being produced in an unlawful condition, you are going to share responsibility, period,” said Dana Hadl, a directing attorney at Bet Tzedek, a Los Angeles nonprofit that provides free legal counsel to workers and drafted the legislation.

The bill, SB 1399, is so far-reaching that it’s being labeled by critics as an existential threat to what remains of the region’s once-booming apparel industry, which has shrunk to roughly 45,000 workers after decades of competition from cheap foreign labor. More than a dozen business groups have lined up against it, including the industry’s trade association, the California Chamber of Commerce and the California Retailers Assn.

Opposition, though, is not uniform as some high-profile L.A.-area companies are backing the bill, including Reformation, which markets eco-friendly women’s wear and has a celebrity clientele, and Fashion Nova, the popular fast-fashion retailer, which has been accused of turning a blind eye to wage theft but recently announced changes to its contracting practices.

The proposed reforms follow those enacted in 1999, four years after 72 undocumented Thai workers were found virtually enslaved in an El Monte apartment complex, stitching together clothing behind barbed wire. That legislation made garment manufacturers liable for wage violations by the contractors who cut, sew and otherwise produce their garments.

But in the decades since, worker advocates say that some fashion brands and retailers that carry their own clothing lines have found ways to skirt the law by employing layers of subcontracting between them and the small factories that actually produce apparel. Random inspections of 77 garment shops conducted in 2015 and 2016 by the U.S. Department of Labor’s Wage and Hour Division found wage violations at 85% of them. Advocates say the situation hasn’t gotten any better, with many undocumented Latino immigrants afraid to file wage claims over fears of deportation.

A 2016 state law, which applied to multiple fields, tightened up regulations on piece-rate compensation, which is traditional in the apparel industry and pays workers for every hem, seam and cuff they sew. That law mandated paid rest and recovery time and required more detailed payroll records.

The piece rate can allow skilled workers to well exceed the minimum wage, but labor advocates say the rates are often set so low that apparel workers can make less than $5 an hour — even though employers are supposed to make up the difference and pay the legal minimum in such instances. SB 1399, which has passed the Senate and is expected to be heard by the Assembly Appropriations Committee this week, would require employers to pay an hourly wage and only allows piece-rate compensation as an incentive bonus, unless provided for in a collective bargaining agreement.

The combination of creating more stringent liability for wage theft and banning the piece rate has opponents saying the reforms will finish off much of what is left of L.A.’s apparel industry, which once employed some 150,000 workers before liberalized trade with Mexico, Central America and Asia sent clothing assembly out of the country.

“This is a huge overhaul of the entire industry,” said Jennifer Barrera, executive vice president of the California Chamber of Commerce, which has labeled the bill a “job killer,” though she acknowledged there was “no question” labor abuses occur in the industry. “You incentivize companies to basically say, ‘I am not going to contract anymore in California. I can go elsewhere and not be exposed to this type of litigation.’”

Labor advocates say the rise of fast-fashion retailers such as Forever 21 has contributed to the problem. The L.A. company had been the poster child for alleged wage abuses before it faltered and filed for bankruptcy last year. The Los Angeles Times documented in 2017 how the company had been cited in nearly 300 claims since 2007 by workers demanding back pay for producing its clothing, yet Forever 21 had not paid anything because it was classified as a retailer.

More recently, labor advocates have been critical of Fashion Nova, one of the local industry’s rising stars — and were stunned to hear it had decided to support the proposed reforms. The largely online retailer has skyrocketed to prominence on its $22.99 skin-tight jumpsuits, $19.99 tops and other affordable apparel embraced by a legion of Instagram influencers. It’s also partnered with celebrities such as rapper Cardi B on clothing lines.

The company’s business model relies on rapidly churning out apparel that may be in style for only a short time. That favors making clothes locally even if production costs might be higher than overseas — but critics charge that has led to abuses given the low price tags. An expose in the New York Times in December alleged wage theft at small subcontractors that was similar to what workers suffered making clothes for Forever 21.

Opponents contend the two companies are outliers and do not represent the practices of the L.A. apparel industry, where the use of subcontractors to assemble apparel has long been standard. They are calling for better enforcement of existing laws.

“This new law is all-encompassing, and it paints the whole industry as a bad apple — that is my problem. We are not all Fashion Nova and Forever 21,” said Ilse Metchek, president of the California Fashion Assn. trade group, who fears big chains such as Nordstrom and other retailers will stop contracting for apparel in the state. “You are picking the worst of the worst.”

Fashion Nova declined to comment on Metchek’s remarks but has announced reforms of its contracting practices. That includes a mandate that its contractors and subcontractors agree to random independent audits and that their workers are paid the applicable minimum wage, which in Los Angeles rises to $15 an hour for employers of all size next July.

Critics say that joint liability for third-party violations would make “any person or entity in the clothing industry” liable, including dry cleaners, personal shoppers and secondhand retailers, according to a letter of opposition by the California Chamber of Commerce signed by 18 other groups.

Hadl said the criticisms are wild exaggerations intended to confuse legislators. She said the bill only creates liability for entities that contract to have clothes made in California, such as a retailer that hires apparel companies to produce clothing to its specifications for its private labels.

That provision would capture virtually all the clothing sold at a retailer such as Fashion Nova, advocates say, but only some of the apparel sold by department stores or discount chains that carry myriad merchandise, including outside brands.

“Somebody who buys finished goods who has not had any input into their production is not going to be held liable. Target says, ‘We want to buy 50,000 Nike T-shirts of the L.A. Rams’ — it doesn’t meet the criteria,” Hadl said.

Bill advocates say joint liability is crucial in ensuring there are large entities on the hook able to pay wage claims. It would also encourage brands and retailers to pay more to have their clothes made and step up their monitoring of the region’s small subcontractors, which cut, sew and finish garments and are often owned by Korean immigrants. They say monitoring has fallen off over the years.

Nana Atelier, a small manufacturer in Boyle Heights that opened two and a half years ago, was one of the few apparel companies that has sent a letter in support of the bill to legislators.

LOS ANGELES, CA - AUGUST 03: Alnea, left, and Arno Nabos, who own the small apparel factory Nana Atelier, are in support of SB 1399, a bill that would toughen regulations on California apparel makers requiring employers to pay at least minimum wage and make fashion brands jointly liable for any labor violations. They see the bill as treating workers fairly. Photographed in Los Angeles on Monday, Aug. 3, 2020 in Los Angeles, CA. (Myung J. Chun / Los Angeles Times/TNS)

Co-owners Alnea Farahbella and her husband have their own upscale women’s fashion brand and make clothes for other high-end brands, including New York designer Rachel Comey, in a brightly lit factory with a cheery, yellow floor. She candidly admits the couple’s own brand, Toit Volant, is subsidizing the company, which pays its workers an hourly wage.

That compensation model raises costs, but she believes the company will eventually turn a profit. Farahbella said that as the factory’s reputation has grown, the couple has turned down lowball offers for work.

“We get approached all the time by brands that are selling garments at retail for $400. They are like, ‘We want to pay $20 for this,’ ” she recounted. “ ‘You want to pay $20 for your cutting, your sewing, your fabric and you want to sell it for $200 for yourself, and then the retailer will sell it for $400?

“ ‘You can’t come to us,’ ” is her reply. “ ‘We are not desperate.’ ”