Fashion operates in a space with relatively minimal regulations, particularly when compared to other industries in the United States. In the absence of stringent rules, and in the face of a growing footprint thanks to increasingly complex supply chains and rising rates of consumption, and consumers that are increasingly demanding information about the environmental, social, and governance (“ESG”) elements of companies’ operations, fashion industry entities have largely turned to self-regulation. This has prompted an onslaught of mechanisms – from third-party certifications, such as B Corp. status, and controversial standardized measures like the Higg Index to the adoption of brand-crafted ESG-centric action plans – that are almost entirely devoid of legal consequences in the event that a company and/or its board fails to follow through.
As for the fashion and apparel-focused regulations that do exist, they are not without drawbacks and/or loopholes. Laws that aim to ensure the safety of consumers, for instance, have been enforced with “an undercurrent of caveat emptor,” according to Melissa Gamble, an assistant professor in the Fashion Studies Department at Columbia College Chicago – or in other words, the laws make it so that “buyers are responsible for checking the quality and suitability of goods before a purchase is made.” At the same time, federal wage and hour laws are “often rendered ineffective [at protecting garment workers] when manufacturers subcontract cut and sew work to other companies,” Gamble says, thereby enabling these brands to avoid liability by arguing that they cannot be responsible for what they – as the retailer and not the manufacturer – cannot control.
This has been the status quo for the industry for quite some time, but change appears to be afoot. Signals are coming by way of new government initiatives and new laws that are being implemented in Europe. As part of a more extensive climate bill, France, for example, enacted a law requiring a “carbon label” to be included on garments and textiles to help inform consumers about the impact of their purchases. This follows closely on the heels of an “anti-waste” law passed in 2020 by the French government that prohibits the destruction of excess inventory and samples, among other things, Gamble notes, saying that, taken together, these developments indicate that “fashion industry regulations and the larger regulatory environment is, indeed, shifting.”
All the while, the U.S. is seeing a rise in fashion-centric legislation that is worth keeping an eye on. With that in mind, here is a running list of key domestic legislation that industry occupants should be aware of – and we will continue to track developments for each and update accordingly …
Introduced: March 6, 2024 by Sens. Bill Cassidy (R-LA) and Michael Bennet (D-CO)
Snapshot: The Americans Trade and Investment Act (“America Act”) is intended to “transform and unleash economic potential in the United States and Latin America through encouraging reshoring and nearshoring industry from China.” The bipartisan bill includes “over $14 billion in incentives for for apparel, footwear, and accessories reuse and recycling, onshoring/reshoring, closing the de minimis loophole, addressing forced labor, and more,” according to its sponsors.
Key Provisions (for the apparel industry): Apparel and textile provisions in the new bill include a 15 percent net income exclusion for businesses engaged in collecting, reselling, reusing, renting, repairing, sorting, pre-processing, and/or recycling apparel, footwear, accessories and home linens; $10 billion in loans and $3 billion in grants for: (i) programs to carry out reuse and recycling; (ii) manufacturing support programs to build new facilities, expand or retrofit existing facilities, and provide low carbon emissions transportation for covered product collection/drop-off or mail-back, sortation, pre-processing, reuse, and/or recycling; and (iii) provision of components and machinery via grants and loans to the businesses to provide components, chemicals/solvents, or machinery necessary for covered product transportation, collection, mail-back, sortation, pre-processing, reuse or recycling.
Additionally, the bill would pave the way for a $1 billion innovation program for research and development related to textile reuse and recycling, and the establishment of a $100 million public education program.
Potential Implications: The bill, if enacted, could serve to chip away at the dominance of fast fashion giants like Shein and Temu, which have been accused of shipping Chinese-made goods directly to consumers in the U.S. and exploiting tax rules in the process. Both companies have come under fire for relying on a trade loophole that enables them to benefit from tax exemptions and less oversight from U.S. Customs when they ship packages with contents that are valued at less than $800. “Temu and Shein are building empires around the de minimis loophole in our import rules – dodging import taxes and evading scrutiny on the millions of goods they sell to Americans,” Representative Mike Gallagher, a Wisconsin Republican who chairs the House Select Committee on the Chinese Communist Party, said in a statement this summer. The America Act directly speaks to that by way of its aim to close the de minimis loophole.
Introduced: June 15, 2023 by Sens. Sherrod Brown (D-OH) and Marco Rubio (R-FL)
Snapshot: S.2004, a bill to amend the Tariff Act of 1930 relating to de minimis treatment under that Act, would “close a key loophole” that foreign companies exploit to avoid paying duties and fees to unfairly compete in the U.S. marketplace.
Potential Implications: “Right now, packages under $800 in valuation are exempted from U.S. duties, taxes, and fees. The number of packages using this loophole to avoid duties has exploded in recent years, to more than two million packages per day. Competitors will often split large shipments into many small packages to cheat the rules and evade the duties they owe, gaining an unfair competitive advantage,” Rep. Brown said in a release. The “bipartisan, bicameral legislation would ensure low-value shipments from non-market economies, such as China, are no longer exempt from paying any duties, taxes, or fees to the U.S. Government.”
“China exploits our capital markets and uses slave labor to undercut American businesses,” said Sen. Rubio. “It is bad for our country to let China flood our country with duty-free packages using the de minimis exception. The Import Security and Fairness Act will close this loophole and take another critical step to stop China from cheating on trade.”
Status: Jun. 15, 2023 – Read twice and referred to the Committee on Finance.
Introduced: June 14, 2023 by Sens. Bill Cassidy (R-LA) and Tammy Baldwin (D-WI)
Snapshot: S. 1969, a bill to amend the Tariff Act of 1930 to require reciprocity with respect to de minimis entries of articles, would bar Chinese exports from entry via the expedited “de minimis” channel and reduce the threshold for duty-free imports into the U.S. to an amount that matches the threshold our trade partners use, ensuring reciprocity and increasing transparency at our borders. The De Minimis Reciprocity Act would also: (1) Exclude untrustworthy countries from using the ‘trusted’ de minimis channel; (2) only allow express carriers to facilitate de minimis imports into the U.S. to help better at stop counterfeits and fentanyl at the border; (3) Require more information on every package entering the U.S.; and (4) Use the revenue proceeds to establish a fund for reshoring industry from China.
Potential Implications: “Our customs laws are outdated. China is taking advantage of that by importing billions of dollars of cheap goods into the U.S. with no oversight. This bill will allow U.S. manufacturers to compete fairly for U.S. store shelves and counter those who wish to use our trade system to launder money or smuggle counterfeits and drugs,” said Sen. Cassidy.
“A trade loophole is allowing Chinese companies to import goods in the U.S. with no oversight – letting them bring in cheap, counterfeit goods that undercut American manufactures and traffic drugs into our communities,” said Sen. Baldwin. “Our bipartisan bill will close this loophole to create a level playing field for our Made in America manufactures, curb the illicit drugs like fentanyl from coming into the country, and help ensure Americans are not supporting goods made with forced labor.”
Status: Jun. 14, 2023 – Read twice and referred to the Committee on Finance.
Introduced: May 3, 2023 by Sen. Brian Kavanagh
Snapshot: The bill (A8078/S6654) would establish extended producer responsibility for textiles; requires a producer, either individually or cooperatively in a group or with a representative organization to submit to the department of environmental conservation a plan for the establishment of a collection program for textile covered products no later than December 31, 2024.
Status: The bill is currently in the Senate Environmental Conservation Committee.
Introduced: February 16, 2023 by Senators Josh Newman, Nancy Skinner and Scott Wiener.
Snapshot: The bill (SB 707) would establish an Extended Producer Responsibility scheme for the collection and recycling of “covered products,” which include any apparel, textile, or textile article that is unsuitable for reuse by a consumer in its current state or condition.
Status: The bill was referred to the Committee on Natural Resources in June 2023.
Introduced: The bill was introduced by Representatives Mena, Doglio, Berry, Reed, Ramel, Macri, Berg, Duerr, Slatter, and Street on Jan. 2, 2024.
Snapshot: The bill (HB 2068) would require large fashion manufacturers and retailers to establish, track, and disclose progress towards due diligence and environmental performance targets, “requiring companies to map a minimum of 50 percent of their supply chain, disclose where in that chain they have the greatest environmental impact when it comes to low wages, energy, greenhouse gas emissions, water, and chemical management, and make plans to reduce those numbers.”
Status: The bill was read first time Jan. 8, 2024, and referred to Committee on Environment & Energy.
Introduced: February 2023 by Representatives Rogers of Cambridge and Nguyen of Andover.
Snapshot: The bill (H.420) would establish fashion sustainability and social accountability by requiring entities designated as fashion sellers or manufacturers to carry out human rights and environmental due diligence for their apparel and footwear products. Requirements include: (a) Supply chain mapping through tiers 1-4 of production i.e. all raw materials suppliers (including subcontractors), raw material processors (i.e., fiber, yarn manufacturing, and chemical suppliers, material processors (e.g., fabric manufacturing, dying, finishing, etc.) and component manufacturers (buttons, zippers, etc.), and finished product manufacturers. Specific targets are set for by when the different tiers of suppliers need to be mapped by, and what proportion; and (b) Disclosure of all suppliers across the four tiers.
Status: The bill was referred to the Joint Committee on Economic Development and Emerging Technologies.
Introduced: January 30, 2023 (re-introduced) with other bills (including the Climate-Related Financial Risk Act) in California’s Climate Accountability Package.
Snapshot: SB 253 would require all public or private entities that: (1) have total annual revenue that exceeds $1 billion, and (2) conduct business in California (i.e., that “engag[e] in any transaction for the purpose of financial gain within California, being organized or commercially domiciled in California, or having California sales, property or payroll exceed specified amounts: as of 2020 being $610,395, $61,040, and $61,040, respectively,” per the Senate Floor Analyses) to report GHG emissions (Scopes 1-3) annually.
Scope 1 and Scope 2 reporting will be required starting in 2026, whereas reporting on Scope 3 emissions – those that result from the activities of entities not owned or controlled by the reporting organization, but that indirectly affects in its value chain – will be required beginning in 2027. Companies’ disclosures would need to be independently verified by a third-party auditor that has expertise in GHG emissions, and the disclosures would be housed on a publicly available digital registry administered by an organization contracted by the California State Air Resources Board.
Potential Implications: The California bills go beyond the proposed SEC rules in several ways, which would make the Climate Corporate Data Accountability Act, in particular, the strictest corporate emissions disclosure law in the country in the evant that it is passed. For example, unlike the SEC’s proposed rules, which would apply only to public companies, the proposed California legislation would apply to public and private entities, alike. More than that, as distinct from the SEC’s rules, which require Scope 3 reporting only where the emissions were material or were included in a GHG emissions reduction target or goal of the company, SB 253 lacks a materiality threshold and would also require all reporting entities to report Scope 3 emissions.
Status: SB 253 passed the State Senate earlier this year and is in the Assembly Appropriations Committee, which has until September 1 to consider and report bills to the Assembly floor.
Introduced: January 30, 2023 with other bills (including the Climate-Related Financial Risk Act) in California’s Climate Accountability Package.
Snapshot: SB 261 would require companies with $500 million or more in annual revenue to disclose their climate-related financial risk in accordance with Task Force on Climate-Related Financial Disclosure framework, and describe what measures they have adopted to reduce and adapt to that risk. In addition to submitting these climate-related financial reports risk reports to the California State Air Resources Board, covered entities would need to make the reports available on their websites.
Potential Implications: The California bills go beyond the proposed SEC rules in several ways, which would make the Climate Corporate Data Accountability Act, in particular, the strictest corporate emissions disclosure law in the country in the event that it is passed. For example, unlike the SEC’s proposed rules, which would apply only to public companies, the proposed California legislation would apply to public and private entities, alike.
Status: SB 261 passed the State Senate and advanced to the Assembly Appropriations Committee, which has until September 1, 2023 to consider and report bills to the Assembly floor.
S.1322 Introduced: Jan. 11, 2023 by State Sen. Brad Hoylman-Sigal
S.6291A Introduced: April 20, 2021 by State Sens. Hoylman, Bailey, Cleare, Mannion, Myrie, Rivera, and Sepulveda
The New York state legislature has passed a bill (S.1322/A.994) to modify legislation that was previously passed by the New York State Senate in the spring of 2022 and signed by Governor Kathy Hochul in December (S.6291A). Both bills are aimed at banning per- and polyfluoroalkyl substances (“PFAS”) in clothing and apparel.
Snapshot: The new bill expands the scope of the state’s ban on PFAS chemicals in clothing and apparel by including additional categories, such as outdoor apparel, which were previously excluded. Now, the ban broadly applies to “apparel and outdoor apparel for severe wet conditions,” and specifically defines “apparel” as meaning “clothing items intended for regular wear or formal occasions including, but not limited to, undergarments, shirts, pants, skirts, dresses, overalls, bodysuits, vests, dancewear, suits, saris, scarves, tops, leggings, leisurewear, formal wear, OUTDOOR APPAREL, onesies, bibs, and diapers.”
The amended bill also adds penalties and creates timelines for banning the use of PFAS in most clothing. “In terms of penalties, the bill requires the state Department of Environmental Conservation to set a threshold for PFAS, including unintentionally added chemicals, which would take effect by 2027,” Kelley Drye’s Joseph Green and Zachary Lee stated in a recent note. “Initial violations would be subject to a civil penalty of up to $1,000 a day, and continued violations would be subject to a penalty of up to $2,500 per day.”
Potential Implications: The legislation comes amid a nation-wide push by regulators to ban these “forever chemicals,” with roughly two dozen states either enacting or proposing PFAS-specific legislation as of December 2022.
Expected Effective Date: December 31, 2023
Introduced: January 2023 by Senators Nguyen, Frame, Hunt, Kuderer, Lovelett, and Salomon.
Snapshot: The bill (SB 5607) would require fashion retail sellers and manufacturers to disclose environmental due diligence policies. Key requirements include: (a) Supply chain transparency, including mapping of suppliers and associated supply chains, and disclosure of prioritized suppliers and risks; (b) Impact and due diligence disclosure, including an environmental sustainability report with information on due diligence policies, processes, and activities conducted to identify, prevent, mitigate, and account for potential adverse impacts; (c) Impact disclosure on prioritized adverse environmental impacts within 18 months after enactment of the policies, processes, and outcomes; and (d) Disclosure of reduction targets on energy and greenhouse gas emissions, water, and chemical management, as well as annual volume of material produced and how much production has been displaced with recycled materials. Climate change targets must align with the apparel and footwear sector’s science-based targets guidance and include all scopes of production.
Status: The bill is currently before the Senate Environmental Committee.
Introduced: May 12, 2022 to Senate by U.S. Sen. Kirsten Gillibrand (D-NY); Jul. 21, 2022 to House of Rep. by Rep. Carolyn Maloney
Snapshot: Aimed at “accelerat[ing] domestic apparel manufacturing and establishing new workplace protections to cement the U.S. as the global leader in responsible apparel production, the Fashioning Accountability and Building Real Institutional Change (“FABRIC”) Act (S.4213 / H.R. 8473) would “amend the Fair Labor Standards Act of 1938 to prohibit employers from paying employees in the garment industry by piece rate, to require manufacturers and contractors in the garment industry to register with the Department of Labor, and for other purposes.” The legislation would establish a nationwide garment industry registry through the Dept. of Labor to “promote transparency, hold bad actors accountable, and level the playing field;” create new requirements to hold fashion brands and retailers, as well as manufacturing partners jointly accountable for workplace wage violations; and set hourly pay in the garment industry and eliminating piece rate pay until the minimum wage is met. The bill would allow for fines of up to $50 million for violations.
Potential Implications: A key point of contention in this bill comes by way of the “Joint and Several Liability of Brand Guarantors” provision, which would hold brands accountable for violations that occur under the watch of their suppliers. Specifically, the FABRIC Act states, that “a brand guarantor who contracts with an employer of an employee … for the performance of services in the garment industry shall share joint and several liability with such employer for any violations of the employer under this Act involving such employee.” This has prompted pushback from the American Apparel and Footwear Association and the Council of Fashion Designers of America, which called for a more limited approach to joint liability. The bill writers included a clause on joint liability. Thus, brands (including licensors) as well as subcontractors will share joint liability for any violations, including the payback of lost wages and additional damages, where applicable.
Status: Sept. 14, 2023 – Sen. Gillibrand (D-NY) reintroduced the FABRIC Act, which she says “proposes major new manufacturing investments and world-leading workplace protections with the aim of ramping up domestic apparel production and creating more dignified jobs in the United States. The federal bill builds on key elements of California’s landmark Garment Worker Protection Act, combined with major incentives to expand domestic production.”
As of Sept. 14, 2023, the bill had 5 cosponsors: Senator Cory Booker (D-NJ), Senator Elizabeth Warren (D-MA), Senator Bernard Sanders (I-VT), Senator Alex Padilla (D-CA), Senator, and Senator Dianne Feinstein (D-CA). “More are expected to sign on in the next few days,” according to a release.
Introduced: March 23, 2022 by State Sen. Brad Hoylman and Assemblymember Karines Reyes
Snapshot: The New York Fashion Workers Act (S8638-A/A9762-A) aims to mandate registration of and impose duties upon model management companies and creative management companies,” and provide complaint procedures and penalties for violations by amending the New York state labor code. If enacted, the bill – which is co-sponsored by New York State Sen. Brad Hoylman and New York State Assembly Member Karines Reyes – will regulate management agencies and provide labor protection for figures designated as independent contractors, from runway models to makeup artists, stylists, and influencers, among others.
The legislation would create new compliance requirements for “retail stores, manufacturers, clothing designers, advertising agencies, photographers, publishing companies, or any other such person or entity that receives modeling services from a creative, directly or through intermediaries.” Such obligations center on things like payment (companies will be required to pay models/creatives within 45 days); contracts (companies will be required to provide models/creatives with copies of contracts and agreements; and contracts between a company and a model/creative will be limited to two years and cannot be renewed without affirmative consent); and disputes.
Civil penalties for failure to comply would include fines of up to $3,000 for the initial violation and up to $5,000 for each additional violation. Intentional failure to comply with registration constitutes a class B misdemeanor.
Potential Implications: “Construed broadly,” Morgan Lewis attorneys Leni Battaglia, Melissa Rodriguez, and Carolyn Corcoran state that the bill “could have massive implications not only for traditional model or creative management companies using fee-based structures, but also for retailers who directly hire models/creatives for studio photoshoots and ad campaigns.”
Status: The Fashion Workers Act advanced out the Senate Labor committee, but failed to receive a final floor vote in the final days of the session. It will be considered in the 2023 legislative session, which begins in January.
Introduced: October 8, 2021 by State Sen. Alessandra Biaggi
Snapshot: Focused on establishing sustainability reporting requirements for large fashion industry entities, the New York Fashion Sustainability and Social Accountability Act (S.7428/A.8352), if enacted, would require fashion retail sellers and manufacturers of a certain size – namely, global apparel/footwear manufacturers and retail sellers that “actively engag[e] in any transaction for the purpose of financial or pecuniary gain or profit” in New York and that whose global annual revenue exceeds $100 million – to map portions of their supply chains and disclose environmental and social due diligence policies.
The legislation would mandate that companies that do business in New York and that meet the annual revenue threshold: (1) Map a minimum of 50 percent of their supply chain across all production tiers; (2) Publish a social and environmental sustainability report that addresses the due diligence policies, processes and activities conducted to identify, prevent, mitigate and account for potential environmental and social risks, as well as the results of each; (3) Disclose their actual and potential negative ESG impacts including greenhouse gas reporting, impacts on water and chemical management, volume of production replaced with recycled materials, and the monitoring and improving of labor conditions; and (4) Set and meet annual targets to reduce their environmental footprint, specifically greenhouse gas emissions, including estimated timelines and quantifiable benchmarks for improvement. Failure to comply could subject companies to fines of up to 2 percent of their annual revenues over $450 million.
Potential Implications: As drafted, The Fashion Act would have “a very far reach that would impact and require compliance from nearly every major fashion brand,” according to Dentons’ Matthew Clark, Babette Marzheuser-Wood, Jessica Argenti, and Larissa Sapone. At the same time, Ropes & Gray stated in a note earlier this year that “given the potentially onerous nature of some of the proposed [reporting] elements” at play, “there is significant opposition in some quarters to the bill in its current form.”
Status: Dec. 2022 – After being referred to the Consumer Protection Senate Committee in January 2022, the bill was amended in Dec. 2022 to include “stronger requirements for chemical use and climate targets, more specific due diligence criteria and expanded enforcement provisions,” per Vogue. It also now provides for joint and several liability between fashion companies and garment workers, and “instead of creating a new set of sustainability standards, the amended Fashion Act uses existing initiatives like Science Based Targets, Zero Discharge of Hazardous Chemicals and the Organization for Economic Co-operation and Development mandatory due diligence framework as minimum requirements for brands to build upon.”
Introduced: May 2021 by the House Judiciary Committee after the original introduction of SHOP Safe in 2020.
Snapshot: The bill would (1) Establish trademark infringement liability for e-commerce platforms when a third party sells a counterfeit product that poses a risk to consumer health or safety and that platform has not implemented certain best practices; (2) Require brand owners to provide platforms with advanced notice of their mark(s) and a point of contact so that the platforms can implement proactive measures to prevent sales of counterfeit goods; and (3) Provide a safe harbor from liability for platforms that vet sellers to ensure their legitimacy, remove counterfeit listings, and remove sellers who repeatedly sell counterfeits.
Potential Implications: The SHOP SAFE Act aims to reduce the availability of harmful counterfeit products by incentivizing online platforms to adopt best practices that will prevent third-party sellers from listing counterfeit products for sale.
Status: The bill was reintroduced again on Sept. 26, 2023 by Senators Chris Coons (D-Del.) and Thom Tillis (R-N.C.).
Introduced: December 2020.
Intended to prevent wage theft, mandate fair pay and improve working conditions for the roughly 45,000 garment workers in the state of California, The California Garment Worker Protection Act (SB 62) was signed into law by California Governor Gavin Newsom on September 27. Among other things, the law requires that employees engaged in garment manufacturing must be paid an hourly rate not less than the minimum wage and cannot be paid a piece rate.
Snapshot: The Act (1) prohibits piecework pay; (2) creates joint and several liability for unpaid wages for “brand guarantors,” along with manufacturers and contractors; and (3) creates new record keeping requirements for manufacturers and brand guarantors. Employees may seek to recover unpaid wages and associated penalties by filing a claim with the Labor Commissioner against the contractor, garment manufacturer and brand guarantor, and the Act may also pursue other applicable remedies under California or federal law.
Potential Implications: Although SB 62 may “ultimately curb the practices of some ‘bad actors’ in the garment industry,” Sheppard Mullin’s Robert Foster and Morgan Forsey have claimed that “the more immediate impact of the new law’s requirements will likely be that some companies contract with garment manufacturers outside of California, thereby decreasing the number of garment manufacturers and workers in California.”
Effective Date: January 1, 2022