NAUMD Tackles California Licensing Regulation, Other Legislative Issues Affecting Industry

Does your store own and operate an embroidery machine? Have you added any emblems or gussets to uniforms lately? If you’ve answered yes to these, and you operate a store in California, you may soon be required to obtain a garment registration certificate designating you as a manufacturer and, in addition, pay a licensing fee. If you don’t, you could face the threat of fines and other penalties.

The little-known regulation isn’t new – it has been an established piece of California’s labor code for years. It’s gaining industry recognition now, however, through an initiative by the North American Association of Uniform Manufacturers and Distributors (NAUMD), who has received anecdotal reports of California dealers being fined for operating embroidery machines at their stores. The association has begun work on the issue and will present its initial findings at the group’s upcoming annual convention, March 28 - April 1.

Fees, determined by the state, range from $250 to $2,500 depending upon your classification and, according to information obtained from the Department of Industrial Relations, division of Labor Standards website, are "based on the applicant’s annual volume.” The regulations further define the term "annual volume" as gross sales receipts,

This wording could have implications for dealers with multiple locations both within and outside the state, for their “annual volume” might very well encompass the entirety of their business. Moreover, California is often considered a bellwether state for others such as New York and Maine – no one yet knows if similar laws are on the books in other areas.

For dealers in the uniform industry, that old adage appears to be true: what you don’t know can really hurt you a lot.

What the Reg Says

Who must obtain a garment registration certificate? According to California’s Code of Regulations, Title 8, Section 13630, every person engaged in the business of garment manufacturing must register with the Labor Commissioner. Labor Code Section 2671(b) defines apparel manufacturing as sewing, cutting, making, processing, repairing, finishing, assembling, 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, scarves, 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.

The regulation also extends to apparel contractors, who are defined as any person who, with the assistance of employees or others, is primarily engaged in sewing, cutting, making, processing, repairing, finishing, assembling, or otherwise preparing any garment or any article of wearing apparel or accessories designed or intended to be worn by any individual. "Contractor" includes a subcontractor that is primarily engaged in those operations.

The genesis of the initiative seems to stem from California’s often contentious battle against sweatshops throughout the state and the need to protect the welfare and safety of those employed in the garment industry. Why the enforcement process has been stepped up and extended to retail establishments, is unclear at this point.

What is certain is that many dealers, often small business owners, see this as yet another unnecessary tax on their establishments. But there’s another component to this that is equally disturbing.

In order to qualify for a certificate of registration in the California garment manufacturing industry, including a renewal, the Labor Commissioner, after investigation, needs to be satisfied as to the “character, competency, and responsibility” of the person applying for registration.

To assure these concerns, as part of the application process vendors must complete an IRS Form 8821 and send it directly to the U.S. Internal Revenue Service (IRS) along with a copy of the completed application. Why involve the federal government? Again, the answer is unclear, but its big-brother effect is certain to send a chill down many store owners’ spines.

Legislative Issues Take Center Stage at Convention

Still evolving as we go to press, the issue will take center stage at the NAUMD’s upcoming convention in Nashville, Tennessee. “We’re glad that the industry now knows about this, and we’ve begun work with our members to determine precisely who is affected,” says NAUMD President Richard Lerman. “This is just one example of the many actions taken at both the state and federal level that impact NAUMD membership in their business operations.”

That is why the association will launch its new legislative program at this year’s meeting. “Pending legislation that affects the industry includes procurement policies for fire resistant fibers, military clothing and policies relating to specific market areas for firefighters, postal workers and law enforcement,” continues Lerman. “Keeping informed as to what is happening on Capitol Hill and elsewhere is key to developing sound solutions to potential problems before they arise.”

To assist its efforts, the association has hired as a consultant John Chwat, president of the government relations firm of Chwat & Company. The firm has extensive experience at the federal and state level representing a multi-client base of corporations, trade and professional associations, industry coalitions, and foreign clients. Mr. Chwat will lead a working luncheon on Monday, March 31, which will review pending legislation and provide government relations strategies that will give conventioneers a better understanding of the legislative process and its implications.

Store owners who have been fined under California’s licensing initiative are urged to contact the NAUMD, as are all industry members interested in learning about the association’s new legislative program or upcoming convention. Contact Richard Lerman at 212-736-3010.