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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. 

While this has been the status quo for the industry for quite some time, 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, passed a law requiring a “carbon label” to be included on garments and textiles to help inform consumers about the impact of their purchases. This law 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 … 

PENDING LEGISLATION

New York Fashion Workers Act

Introduced: March 23, 2022 by State Sen. Brad Hoylman and Assemblymember Karines Reyes

The New York Fashion Workers Act (S.8638-A / A.9762-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.

Key Provisions: The Fashion Works Act 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.” 

Current 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.

Fashioning Accountability and Building Real Institutional Change Act

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

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. 8473would “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.” 

Key Provisions: The FABRIC Act 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.

Current Status: The FABRIC Act is in the Senate Finance Committee for study and in the House Ways and Means and Education and Labor Committees for study. 

New York Fashion Sustainability and Social Accountability Act

Introduced: October 8, 2021 by State Sen. Alessandra Biaggi

Focused on establishing sustainability reporting requirements for large fashion industry entities, the New York Fashion Sustainability and Social Accountability Act (S7428 / A8352), 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. 

Key Provisions: “The Fashion Act” 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.”

Current Status: The Fashion Act was referred to the Consumer Protection Senate Committee in January 2022. 

ENACTED LEGISLATION

California Garment Worker Protection Act

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. 

Key Provisions: 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 recordkeeping 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