Apparel manufacturing in California

Posted by Kathleen Fasanella on Apr 30, 2007 at 11:05 am / Operations / Trackback

We’ve discussed this topic on FI in fits and starts but a piece from today’s mail makes me think we should cover this officially:

We are a small studio in southern california making a transition from teaching textile techniques to designing a line of baby blankets, pillows, and accessories. It is our intent to follow that up with a line of clothing focused on the same buyers. We have made all of our own patterns, and are sewing our prototypes in our studio.

After reading your book we are considering going to contractors for some professional help before starting real manufacturing. Before going to either a contractor or deciding to just do our own small scale manufacturing of these goods, we have read on your website and now on the links, that we may need to procure a registration from California to continue forward. In your opinion is this correct (if we have 2 or 3 of us sewing blankets in our studio for sale?)

Also, when following the links on your site to the CA Gov site, it appeared that to get a registration number we needed to take an exam. How do we find out what we need to study to pass this exam?

Based on information from the State of California website, “every person engaged in the business of garment manufacturing must register with the Labor Commissioner”.

The term person is defined as:

…any individual, partnership, corporation, limited liability company, or association, and includes, but is not limited to, employers, manufacturers, jobbers, wholesalers, contractors, subcontractors, and any other person or entity engaged in the business of garment manufacturing.


Garment manufacturing is defined as:

“Garment manufacturing” means 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, scarfs, 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 consistent with the purposes of this part. Labor Code Section 2671(b).

In other words, even though bedding is not specifically mentioned, the intent of the law is clear so I wouldn’t waste time quibbling. The regulations would require you to have a license even if you did not intend to produce apparel later. The regulations are all inclusive. Even if you are sewing for profit by yourself at home, you will need a permit -except in cases of making clothing to order (custom work).

The registration requirements for new applicants (pdf) are comprehensive. As an ongoing enterprise, you should already have the required supporting documentation. Everyone else will need to go through the gauntlet of getting official with state and local offices and the IRS first. You will need to fill out the Application for Registration (pdf), include all attachments and include the $25 application fee (certified check, cashier’s check or money order). Once you’ve submitted your application, the state will issue you a file number along with an authorization for examination letter (which explains where and when you can take the exam). This packet will also include the study materials for the exam.

There is a fee beyond the application fee. The registration cost for the first year is $200 for sewing contractors and $750 for manufacturers. You will have to pay this fee annually to stay current. Subsequent renewal fees are sliding scale, based on your sales from the previous year (they’ll want to see quarterly reports). The minimum fee is $750 for manufacturers based on annual sales of $1-$500,000. The fee on sales from $500,000 to one million is $1,000.

With regard to your situation, there are penalties (I don’t know how severe) for manufacturing without having obtained registration. I can only urge you to cease manufacturing until you can get one. There is one sticking point; the application asks whether you’ve been manufacturing without a license but answering in the affirmative can expose you to penalties or denial of your application. Accordingly (don’t you dare say I said so or I’ll deny it) I don’t know that you should disclose you’d been doing this prior to seeking license. The application specifically states one may not commence manufacturing until the registration has been granted.

The upside of licensing is that it makes searching for sewing contractors in the state much easier. The included link also includes links to databases in NJ and NY.

[amended] Abigail sends an important comment so I will be updating this post once I can verify it with the state office.

Amended:
Other entries in this series you may find useful are:
California Garment License for Out of State Companies This should be read by California residents too.
Studying for the California garment exam
Apparel Manufacturing in New Jersey
Apparel Manufacturing in New York

77 Responses to “Apparel manufacturing in California”

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Karen C
April 30th, 2007
1:11 PM

Thanks, Kathleen, for this post. I have a form letter addressed to the Govenor that was sent a year or so ago by the Los Angeles fashion community. I’ll find it and post it in case any one wants to send a letter protesting the cost of this license. I agree with the need for regulation, but the fee is way out of line for the purpose. It’s cheaper to get a license to practice medicine or law. How’s that for irony?

Rachel G.
April 30th, 2007
3:47 PM

Thank you for this post!

Andrea
April 30th, 2007
4:19 PM

This discussion has been going on for a little bit and is very important. Thanks for making it concise. I am seriously considering starting a lobby for this. It is so unfair to small business!

Todd Hudson
April 30th, 2007
4:33 PM

Well at least the database the DLSE maintains is useful. Of course I’ll have to pay $750 if want to hire anyone on that list. Thanks for the article but it hurts my wallet.

The database is also useful to find someone to employ me!

I wonder why there are barely any tailors or tailoring shops registered? Most tailors hire employees or contractors to stitch.

Kathleen
April 30th, 2007
4:55 PM

I wonder why there are barely any tailors or tailoring shops registered? Most tailors hire employees or contractors to stitch.

It’s not an employing people issue because even if you are doing all your own work, you still need a license to manufacture if you are manufacturing. Tailors make clothing to order so technically, they are not manufacturers.

Rachel G.
April 30th, 2007
5:18 PM

So what happens if you are selling garments to stores without being registered? Will they track you down and fine you? Would it be best to cancel any orders received until all of the paperwork is in place? Also—I’m curious about the exam. Has anyone taken it?

Sock Puppet
April 30th, 2007
5:41 PM

I’ve seen the training material and a sample of the exam, don’t let it worry you. There are no tricks, simple language. It reminded me of a driving test. If you get the driver’s training manual for your state, you don’t have much problem passing the written exam.

Kathleen
April 30th, 2007
6:57 PM

Abigail sent me this message in an email. I don’t know why she didn’t post it. Shy? Very important stuff. I will make some calls tomorrow and amend my post accordingly. Thanks Abigail!

I wanted to send you a comment on the garment registration license. I went through the process of applying for the license last year. Before the license I was producing all my items on my own, no employees, no contractor and without the license. I am 90% sure that you only need the license if you have employees or you are contracting any of the manufacturing process. The wording is slightly ambiguous, it says anyone “engaged in the business of garment manufacturing must register with the Labor Commissioner.” But then you have to read the definition of a “manufacturer”. A manufacturer is someone contracting to have the garments made. If you have in-house production, then you fall into the “contractor” category. Some businesses could fall into both areas.

Also the exam is not very difficult if you understand general labor laws. They send a packet to study with all the information necessary to learn. The main reason for the test is they want you to be sure you understand how the labor laws work. There are some basic figures on figuring out piece pay, how it affects minimum wage, to when overtime kicks in. I spent maybe a total of four hours studying the info and that was not lumped to together on the same day.

The biggest issue with the applying for the license is “DON’T MISS THEIR DEADLINES”. They are very strict with the deadlines and you will lose your money paid and have to re-pay to apply again. Also I think once you pay, the money is theirs, even if you do not end up getting the license. Also everything has to be paid by cashier’s check or money order. No credit cards or personal checks. (Very irritating for us small businesses.)

Abigail
April 30th, 2007
8:09 PM

Sorry I did not post the above items myself. These are my interpretations of the garment registration process and I could be totally wrong. So please call them if you are needing a license and have questions. The DLSE are very nice and helpful when you call with questions.

One last note, (because, last year, I had to scramble at the last minute to submit this info) if you do not have any employees, you still need to apply for a Federal Employement Identification Number (FEIN). The reason for the FEIN is that you have to submit Form 8821 to the IRS every year, which needs your FEIN.

One last tidbit of info, you have to pay the appication fee and the registration fee, together, when you submit your application. For example, I paid by cashier’s check $750 = $25 application fee + $725 registration fee. This is why meeting the deadlines are so important; you cannot start the process unless they have your entire payment up front.

nadine
May 1st, 2007
6:15 AM

Believe it or not the “Feds” came to my studio partner’s small fashion boutique in Brooklyn and started asking questions about who is making the clothing and accessories – mostly accessories. She said she was one owner of the boutique and sewed her production herself – true. They tried to get her to get this license but got confused when she said she did not hire any outside help. In the end they went away and didn’t pursue the matter. However I think she just dodged the bullet as she makes bathing suits. Maybe she is just too small scale. I used to work/help run an accessory contracting/private label company and we didn’t know we needed this license. The feds found us and we quickly applied for it and posted it. Later, they made regular visits to our small shop of 25 sewers and they interviewed them on conditions and pay.

In New York they are very aggressive about this license if you do any sewing production. They also are very aggressive about sending tax people to designer sample sales to see if they are taking cash in and not reporting it. I’ve had a few designer friends get a knock on the door by the retail tax man when they saw their sample sale sign posted. Just so you know.

Darby
May 1st, 2007
8:24 AM

$750 is steep! It is only $200 in NY, and there is no test or anything like that.

Dana
May 2nd, 2007
9:59 AM

A couple of you have mentioned that NY requires a similar license. Where can I get more info on which agency handles this? Thanks.

Oxanna
May 2nd, 2007
12:14 PM

$750 annually?! Yeesh, what does it pay for?

Remind me again why I want to start a business in California…?

Miracle
May 2nd, 2007
2:17 PM

One of the reasons that California has this law is because of the crackdown on “sweatshops” and companies employing unfair labor practices.

A while ago a law was passed that makes a manufacturer proportionately liable for a contractor failing to comply with labor laws (and CA has some of the toughest labor laws). For example, if you hired a contractor to produce your goods, and the contractor failed to pay the employees overtime, and the employees sued the contractor, you, the DE/manufacturer would be financially liable for your proportionate share of the wages owed to the employees.

It happens all the time.

Unfortunately, the fee can be cost prohibitive to a very small enterprise, but it’s one of the state’s ways to try and keep a handle on unfair labor practices in the garment industry.

Julianne Bramson
May 2nd, 2007
4:54 PM

The idea of needing the license even if you don’t have any employees frightened me as I just started making some bags to sell at an art show. I was worried that I had already broken the law! I asked my lawyer hubby to look into it. And he quoted this part of the Cal. Labor Code section 2671:

“Person” does not include any person who manufactures garments by
himself or herself, without the assistance of a contractor, employee,
or others; any person who engages solely in that part of the
business engaged solely in cleaning, alteration, or tailoring; any
person who engages in the activities herein regulated as an employee
with wages as his or her sole compensation; or any person as provided
by regulation.

So, it is only an issue if you have employees and I agree that it is good to have very serious regulation and enforcement of garment sewing practices. I for one, and glad to know that if I hire a properly licensed CA contractor to sew things, I can be pretty sure that they are following good labor practices. I think the high cost of the license is to cover the cost to the state of enforcement. If it was cheap and they could not pay employees to go out and check up on manufacturers and contractors, it would be purely symbolic and not worth much. However, with that said, it should still be less to license and police the sewn products industry then the medical industry!

Abigail
May 2nd, 2007
6:14 PM

When hiring a contractor in California, I would check their record with the DLSE and see if they have ever had any past issues. That might help somewhat in not hiring unscupulous contractors. I would also put in your contract with your contractor that you can take them to court if the DLSE ever come to you for repayment.

My understanding of the law is that your liability is only as big as how much your contractor sews for you. And the liability is only with the pieces sewn when the contractor was in violation of the labor laws. The contractor is supposed to have their employees mark on their time cards who the customer is and what they were sewing. So if you are a $1,000,000 per year company, your hit would be bigger than someone making $100,000 per year.

Heather
May 2nd, 2007
6:45 PM

I am starting a business and am going through this legal circle as well. I do not have employees, I will not contract out, I am doing the work myself. I called the Garment Registration Hotline, telling them of my situation, do I still need to pay? YES

Still confused, I WENT to the 9th floor DLSE office in San Francisco to ask my question a few weeks ago. They still said, YES.

Reading further into the Labor Code Section 2671 (a) paragraph 2, as mentioned above, says that I don’t need one. Frustrated, I contacted various political entities: Congress-Woman Anna Eshoo, who sent me to Senator Joe Simitian (also ex-State Assembly). Senator Simitian’s office has been very helpful. I tried calling the Garment Hotline again today (Wednesday). Hotline is open MWF 8am-5pm, no one was in the office, not even close to 5pm! Yes, I’m frazzled. Anyway, if the Hotline’s Supervisor cannot testify to that section of the Labor Code, Senator Simitian’s office will do their part to ensure that the DLSE will answer questions truthfully, and know the Code like the back of their hand.

I will keep you all updated :)

Heather
May 3rd, 2007
5:53 PM

Update:
The DLSE called back and answered my question today.
If you are a business without employees, does not contract out, and are doing everything yourself, you DO NOT need a Garment Manufacturer Registration Certificate. YAY!

But there is a very fine line, and you need to know, and keep, yourself on one side, otherwise get the License to get to the other side.

For instance, one who is in business for themself cannot sell garments to another company (private label); the “other company” may or may not have this license, if they do, they are violating the terms of the license, they can be fined, and you can too.
*Selling to a boutique is a fine line, call the DLSE for clarification of your own situation.
*Selling your product direct to the customer is fine without the license.
*Another fine line is taking cut material to a Pleater, before a garment is finished; even though they are doing just that, the Pleater may be involved with other areas of finishing garments, in which case they need a license, and therefore you would too. And, technically, taking something to a Pleater is “contracting out,” so you would need one anyway.
*Document everything. If you are inspected by the DIR, you will need to prove that you are acting on your own.
*Sewing location: Sewing in your own home is a no-no.

Hope this helps!!

J C Sprowls
May 3rd, 2007
8:32 PM

Conducting business out of your home is not permitted in CA? Goodness! So, even a custom clothier must maintain a workroom outside the home? Are we sure whether they mean that contract sewers cannot work from home (e.g. they must report to a workshop)?

In my case, that’s the entire reason I decided to buy a house. The rent on an apt plus a light industrial space was about 30% more than a mortgage on a home (more, if I add in the utilities, extra liability insurance, etc).

I do have my own issues to contend with, namely: I can’t run a retail boutique out of the home, I can’t have employees, and I can’t have a lot of traffic, etc, etc. But, that’s HOA & building code stuff. Of course… I didn’t tell anyone about the equipment I own – that’s between me and the insurance company.

Abigail
May 4th, 2007
8:09 AM

Working from your home in California is fine. If you are producing all your clothing yourself then you are not a true manufacturer in the definition of the DLSE. If you are manufacturing out of your home, in the definition of the DLSE, your local business license or code enforcement is going to shut you down. There are strict local laws about what businesses you can do out of your house. Your local agency will not give you a license if you are truly manufacturing out of your house. If your local agency does give you a business license then my guess is you are not a manufacturer in the definition of the DLSE (unless you hire outside help). Is there a grey area? Probably and then you need to contact your local agencies to determine whether it’s ok to produce out of your home.

J C Sprowls
May 4th, 2007
9:35 AM

I’m glad this has come to surface. It will benefit so many of us by underscoring the fact that we need to work with local authorities to establish the realm of possibility.

In my case, I’ve contacted:
* state and county business licenses,
* state and county resale licenses,
* home owners’ association,
* home owner’s insurance, and
* local building code.

When product is ready to start production (and, before going out the door), I need to consult with:
* legal counsel for product liability, and
* a prod liability insurance broker.

When I grow to the point of requiring employees, the business structure needs to change and relocate. Then, compliance needs to expand to include:
* fire & safety,
* property liability,
* workman’s compensation,
* fair pay & insurance, and
* competitive employment.

Fortunately, CO does not regulate (i.e. pick on) the garment industry, specifically, as these matters falls under Employment practices and guidelines. Abusing employees would result in a case with Div. of Wage and Hour; and, unsafe work conditions with OSHA.

Karen C
May 4th, 2007
1:04 PM

Heather is right that you are NOT supposed to be sewing in your home for profit. You can have a home office, but that’s about it. Yep, that really works.

Oh, and you can’t work in California without a green card if you are from another country. We all know how well that’s working for California too, lol.

Ah, if only the legislators had a does of common sense….they would probably be working in the private sector.

Portia
May 8th, 2007
4:47 PM

Ok, Ok, so let me get this straight. Being in CA and starting a manufacturing business, albeit the work is contracted out, I am still able to run the business from my home office. But, I will be unable to bring the contracted garments home to do ANY individual embellishments like a random piece of antique lace, or a random button, things that make each garment a one-of-a-kind piece of art.
This would imply that I am manufacturing in my home and thus would need a totally different location to do such things?
I am about to enter the process of legalizing my new business and it seems that every time I blink there is another license I need to apply for. Honestly, I am begining to get a bit overwhelmed and worried that I will surely miss an important step. Being a Sole Proprietor, I wish there was a simple list of exactlly what I need to do and in what order, so that everything all falls into place in the proper time-frame.
One example, when I apply for my business name to be trademarked, what is the turnover rate before finding out whether my name is accepted and I can put labels into production…etc. So many things to think about.
Sorry for the rant, I am just starting to get a bit confused I guess. What gives me hope is that once all these “start up” things are done, they are out of the way and I can move on except for the yearly fees.

Karen C
May 8th, 2007
5:07 PM

Portia,

One thing we always say in the law business is what is the intent of the law. Simply put, the garment registration laws were enacted to stop sweatship labor. Don’t sweat it if you have to do some custom work in your home–I wouldn’t.

And read Kathleen’s book about trademarks.

Portia
May 9th, 2007
4:38 PM

Thanks for your respomse Karen. I have been on the phone again all day today with the different government agencies trying to figure out which and what to do first. Got it down now for the most part.
However, and not to make California sound even worse than this thread already does for us manufacturers, but it’s actually a fee of $800 and not the above mentioned $750. The following is a direct copy/paste from the LLC Business Application form:
“Registration of a limited liability company (LLC) with the California Secretary of State (SOS) will obligate an
LLC that is not taxed as a corporation to pay to the Franchise Tax Board (FTB) an annual minimum tax of
$800.00 and a fee based on the annual total income of the entity.”
I post this assuming that most here wouldn’t be filing as a corporation but an LLC or Sole P.

Karen C
May 10th, 2007
10:46 AM

Portia,

You’re confusing two different fees. The $750 is paid for the Garment Registration. The quote you pasted in is what your minimum annual tax will be if you decide to set up your business entity as a limited liability company. Email me direcly through my profile and we’ll discuss further.

maggie
May 14th, 2007
5:05 PM

Hey,
I just happen to be looking for someone to manufacturer my samples of my specialty sports line. I wanted to set up a manufacturer as I wanted to begin talking to buyers to carry my line in there store.
So, am I reading this correctly? Before I do that I must file this $750.00 and take the test?
I am legally filed in California as a sole proprietor garment business, I also did my fictious name and so forth. I hired a seamstress to complete my samples for me. She works out of a shop that another woman owns.
So say someone like TJ MAX or Fred Segal’s picks me up, will I still need to file this fee and take exam…
God, there’s always something isn’t there?

Thanks so much…

Abigail
May 15th, 2007
7:46 AM

Yes, if you hire someone to sew your clothing, you must get a garment registration number. Also the company/person you hire to produce for you must also have a garment number. The process takes anywhere from 30 to 90 days to complete. So you really need to look closely at your production time once the orders are taken. The 30 to 90 days may not meet your deadlines. If it does not meet the deadline, I would recommend you apply now rather than later. This fee is one of those things you have to chalk up as ‘cost of doing business in California’.

Rosemary
May 18th, 2007
8:18 PM

This information has been helpful but I would like to ask about using tee shirt manufacturers for my silk screen designs. Do I need an RN for buying blank white tee shirts from a manufacturer that then go to the garment dye house and then to the silk screener? I have no employees and will ship orders to stores myself. I don’t manufacture the garment myself in any way excpet for using these three companies.

Abigail
May 19th, 2007
7:34 AM

Either somewhere on this blog or in Kathleen’s book there is a lengthy discussion about RN numbers. That number is completely different from the garment registration number. Trying a search of this blog.

jinjer markley
June 6th, 2007
2:36 PM

I do know that in order to be a licensed contractor, you can’t work in a live/work situation. they’re real, real strict about this–a friend of mine looked into getting the license. Her studio had a separate door from, and was on a separate floor than, her apartment, but they still disqualified her.

Custom Clothing does not require any garment license. Custom anything is in a totally different category than light manufacturing. You can engage in custom manufacturing,, but not light manufacturing, in a building zoned residential, for example. That’s as much as I know. As soon as I figured out I was of the hook, I stopped hurting my brain with the legal issues.

I do wonder though: what about hiring patternmakers or other contractors that aren’t involved in the sewing process? Do you/they need a contractors license?

Also,
Aigail, you say you only need the license if you are contracting out any part of the process. But then you say if you produce all your own stuff, you fall in the “Contractor” category.

So do you mean tha, if you make every aspect of the sewn product yourself,

A) You need a license, but you only have to pay $200 a year

or

B) you don’t need to do anything

?

Abigail
June 6th, 2007
6:18 PM

My understanding is that if you are producing your own items, you are categorized as custom clothing. Your explanation I think hits it on the head what I was trying to explain. However, I am sure there is a fine line between custom produce your own clothing and produce your own clothing contractor. So your friend probably hit the latter category and, my opinion, the difference occurs with the amount of machinery your running, employees, amount of space being used, etc.

Usually your local code enforcement is going to tell you when you are no longer allowed to produce at home. The assessors office requires you to list all machinery used in your business yearly and they will probably deny a home business a license if the machinery used is not appropriate for a residential area. Basically, I was told no on anything industrial that was toxic or corrosive, high potential for starting a fire, special industrial wiring, etc. Also in the area I live, you cannot have employees working from your home and only one customer at a time.

I was a custom clothing producer who needed to make the jump to ‘manufacturer’. That why I now have a license.

One question I would have is if you do custom clothing at a business location, do you need a garment license to hire someone to work at your business assisting you to produce your custom work?

Jessie
June 30th, 2007
1:07 PM

Goodness Gracious… I have rented a small retail space in california with my mother and sister. It has always been our dream to have our oun botique where we sell our own line of clothes, so we have taken the plunge. I thought we had all of the licenses we needed now I found out about this garment manufacturer license. I called the office yesterday and they we not helpful at all! If we make all of our own stuff, no contracting or hiring can we sell it in our own store?? Can we do some work at home?? I do not want to take any chances.
Also- does anyone know if its legal to buy clothing, alter it (add beads, or lace) then resell it?

Abigail
July 2nd, 2007
7:46 AM

Here are guideline to help determine whether you are in the business of clothing manufacturing:

1. Do you or someone else create clothing patterns for your items?
2. Is the start of your clothing piece cut from raw material?
3. Must your clothing piece be sewn/constructed in order for it to be wearable?

If you answered yes to one or more of these questions, you may be considered a clothing manufacturer.

The exception could be (but not always) coutour one of kind pieces where only one person is doing the entire process.

Embellishing, dying, screen printing, etc. premade clothing is not clothing manufacturing.

Now you may not be in the clothing manufacturing business but need to hire a contractor for some part of your process. Then you may need a license, even though your technically not a manufacturer.

Mikage
July 12th, 2007
8:47 PM

My wife, a friend, and I are thinking of starting an online custom dress making business from our homes. Think of it as a tiny version of mytailor.com. Customers design their dream dresses on their own using our easy-to-use website, choosing from fabrics to styles, sizes, finishing, etc.

Light manufacturing is obviously not allowed in our residential area. Can our business be considered a custom clothier (with no garment manufacturer registration) and do all sewing at our homes? We will not hire any employees or contractors. It is strictly online only, no shop or customer vising.

Abigail
July 13th, 2007
2:36 PM

You will need to contact the State of CA for that answer. Your business model is on the grey line.

Emily
July 17th, 2007
7:48 AM

We are a company outside of CA looking to manufacture IN California and I finally received our packet of information. It seems very confusing as a few of the pieces of documentation have to show the state of California as the holder of the ‘workers comp’ cert, etc. Does anyone know how that works? Will a ‘workers comp’ cert and other documentation needed for the garment license have to be duplicated for each stated (i.e. the state where the company resides and California)? Will more fees have to be paid to keep up workers comp in both states, etc? EEEeekkkkkk……I would love to hear feedback from anyone who has applied for a California manufacturing license when THEIR company does not reside IN California!
Thanks!

Sandy
July 23rd, 2007
4:50 PM

I am not sewing, but can I cut/prepare patterns at home to be sent to the contractors?

Thanks,
Sandy

Tamara Kasra
November 17th, 2007
9:59 AM

In order to apply for garment manufacturing license and garment registration, do you have to have workers compensation certificate of insurance? If I am sole owner, no employees, and am wanting to contract out all cutting & sewing- essentially I am simply taking & processing orders- am I even required to have worker’s comp. ins.? I do not have 3 or more employees? & Aren’t contractors under category of “independent contractors” whom I 1099 @ end of year- NOT employees? I am trying to figure out what direction my business should take as it is new and I don’t want to break any laws but at same time I cant afford big expenses when I am testing market for my product anyway…. Advice and suggestions would be greatly appreciated. Thanks : ) Tamara

Abigail
December 12th, 2007
5:33 PM

You do not need worker’s comp to get the license. I just inserted a statement that I currently had no employees on staff and all my work would be contracted out. If you do not have a federal employee tax number, you will need to get one for the application. Every year the IRS will run a check against the number to make sure there are no claims against it. In other words, I have the fed ID # and have never used it since I have no employees. I hope this helps.

Rosie
December 12th, 2007
7:37 PM

I am going currently waiting for an answer on my California Garment Manufactures license and this is a very confusing topic. I have been making baby clothes for order and selling on ebay. I have been designing and manufacturing from my home and have been doing it on an on demand basis, so I don’t carry hundreds of items I only make as people order. Well i decided to contract out about 4 months ago(by the way I have Fed ID, Tax ID and Business license) and found out the licensing requirement. Well I took the test paid all the fees. The DLSE inspector came to my house and asked If i was contracting with anyone and of course i hadn’t thats why I was trying to obtain the permit. Well about a week later he called and asked me why I hadn’t told him about my ebay sales. I told him he had not asked about it and it was just home sewing. He told me it was strictly illegal to manufacture from home and quoted labor code section : 2650 which is basically the definitions of Employer, Home, Industrial Homework, Division, industrial homeworker, To employ and Person.

He came back a week later and gave my a notice to discontinue manufacturing. I thought it sounded ridiculous, I mean how many people manufacture items from home and sell at craft fairs, online and to people they know. Well I decided to do a little investigating for myself.

The definition of industrial homework is as follows: means any manufacture in a home of materials or articles for an employer when such articles or materials are not for the personal use of the employer or a member of his or her family.

Section 2651 basically says industrial homework is illegal.

However section 2671 basically says: (a) “Person” means any individual, partnership, corporation, limited liability company, or association, and includes, but is not limited to, employers, manufacturers, jobbers, wholesalers, contractors, subcontractors, and any other person or entity engaged in the business of garment manufacturing.

“Person” does not include any person who manufactures garments by himself or herself, without the assistance of a contractor, employee, or others; any person who engages solely in that part of the business engaged solely in cleaning, alteration, or tailoring; any person who engages in the activities herein regulated as an employee with wages as his or her sole compensation; or any person as provided by regulation.

So by this section it is legal to manufacture garments without a license as long as you are not contracting out or hiring employees to manufacture for you. Basically it is legal to manufacture as long as you are doing all the work.

Furthermore the definition of Industrial Homework is to manufacture for an employer when the employer does not plan to use for personal use. So by this code it should not be illegal to manufacture from HOME as long as you are doing all the work and not contracting or hiring employees.

I called the local DLSE office today and talked to the inspector’s supervisor and he agreed with me that it is not illegal to manufacture from home as long as you do not contract or hire employees and that because I did not disclose my ebay sales it made it look like I had an integrity problem. Well I have already given the other inspector all my tax documents, list of suppliers and approximate sales and he is supposed to be conducting an investigation right now.

So we will see what the results are sometime soon.

Rosie
December 28th, 2007
8:39 AM

Well I hate to gloat but I was right, I got a call from the Dept of Industrial Relations last week and they agreed that it was legal what I was doing and that I had been approved and yesterday I got my license in the mail. Yaaa!

Tanya
December 30th, 2007
6:14 PM

someone please help, i got my packet today to take the exam in cali,theres so much information can anyone give me a idea on what i should concentrate on

Abigail
January 1st, 2008
2:04 PM

Rosie – I am so glad they approved you.

Tanya – You need to know all of it. The test is about labor laws and the regulations regarding the garment manufacturing. The labor portion is not too difficult if you have worked before. It’s the standard rules. Most of the test is multiple choice but there is a section where you need to do the math and answer certain questions in writing, short answers.

Tanya
January 1st, 2008
3:02 PM

thank you im so nervous about it i have a small sewing room in the back of my shop and they acually came in and shut me down and closed my shop till i get the licence

Daren
February 4th, 2008
12:27 PM

Can anyone tell me where the exam is given? Do they offer it locally throughout the state, or do you have to go to San Francisco to take the exam? Thanks in advance.

Irene
April 11th, 2008
12:42 PM

I work for a company in California that manufactures all the clothing specifically to customers’ precise measurements. Basically, I believe everything we make would be defined as custom, and we sell nothing off the rack.

Three weeks ago about six state/federal employees from various agencies came in out of the blue, asked tons of questions (some of which were illegal) and imposed a fine of $100 per employee because my bosses did not have the license you’ve been talking about. They also claimed to have the right to confiscate all clothing in the shop (samples and customers’ custom garments), and apparently got in trouble later with a supervisor because they didn’t. From what I understood, anyone who alters clothing, even silk-screening T-shirts, would need this license, so certainly tailoring shops and dry-cleaners who offer alterations would fall into the category as well.

There are 3 manufacturers registered in Sacramento, while Google comes up with about 2600 business results for tailoring in Sac. Nobody in the state capital even knows this license requirement exists.

The deadline for the license application was 30 days after their little raid. It’s been three weeks, and my boss has been trying to contact them regarding a couple questions she has on the application. The initial guy didn’t know the answers so he directed her to contact a woman in SF, who hasn’t returned any of the phone calls. It’s looking unlikely that my bosses will have the information they need to complete it in time.

Just a taste of what can hit the fan if you don’t have the license… If I ever open my own business, it won’t be in my lovely home state. =(

E Zentner
April 25th, 2008
7:20 PM

A partner and I are starting a clothing line and will be contracting out the manufacturing. I applied to take the test, the application was very easy since we have no employees. Like another posting said, just write in that you have no employees on the application. But you do have to have an FEIN for the application. I just downloaded the application and instructions from the government website.
I sent it in and paid my manufacturer’s fee + the $25 application fee.

I just received the materials to study and a letter which states the test is administered every Friday at 9AM and is on a first come first serve basis. The test location for me is in LA, which is the closest to the zip code where our biz is located. So anyone taking the test shouldn’t be taking it too far from home since it is based on your zip code.
Also, you have 60 days from the date of receiving the test materials to take the test. So I will be taking it about two weeks from now and will report back what it was like.

Ellen
June 10th, 2008
8:37 PM

I promised I would report back! I took the test, it took about 30 minutes to complete, but about half the people were still there when I finished.
They said it would be 4 to 6 weeks for results, but they mailed me my passing notification within a week after the test.
The test wasn’t difficult and you pretty much just need to read the book that summarizes all the rules. There was a question about exit locations and fire extinguishers, however, that were in one of the other regulation/codes booklets they send you in the study materials.
The test was in three parts, multiple choice, fill in the blank, and true/false. There was also a test version listed at the top of the page, so that would imply not all tests are the same.
I was slightly irritated that there were some typos on the test, and there were some questions they crossed out because they related to the old CA minimum wage. The newest CA minimum wage, as of January 1, 2008, is $8.00/hr, but they didn’t even test on that. The test is so old it hasn’t been updated since the 1990’s.
At any rate, know your minimum wage law, child labor law, where exits should be located, fire extinguisher rules, time off and breaks.
And don’t sweat it, it’s not that tough!

Diane
July 5th, 2008
7:53 PM

I have been doing it all myself – cutting, sewing, etc. But it’s getting to be too much for me. I thought I could just hire a seamstress that wants to work at home. A win/win situation. A stay-at-home mom who needs a littkle extra $, or a disabled person. Guess I was wrong.

I understand why we have labor laws, but in some ways it seems to be a dis-service to the citizens of Cali.

What I am considering now is having someone outside of Cali sew for me. Either a contractor or an individual. Will I have to comply with the other state’s laws, or would that be left up to the person or persons with whom I contract?

What about co-ops where the business is worker owned? What laws apply then?

Bob
October 10th, 2008
11:50 AM

Still trying to get info on what/how to study for the exam. How detailed does the exam get? Are the stapeled summary documents enough to study from or do you need to try and understand the official CA publications? Almost seems you need to be a lawyer to understand that. What types of child labor law questions do they ask? Thanks for your help.

Kathleen Fasanella
October 10th, 2008
12:35 PM

Bob, I’ve amended the original entry at close with links of more recent entries that deal with these questions, one specifically describes studying for the exam.

Leslie
December 3rd, 2008
6:11 PM

Quick question…does this apply to garments only? What about accessories, diaper bags, and the like? I don’t make clothing, but I do make cloth bags. Does this apply? If so, you then need licensing to expand and contract out to contract sewers?

Kathleen
December 3rd, 2008
6:38 PM

does this apply to garments only? What about accessories, diaper bags, and the like? I don’t make clothing, but I do make cloth bags. If so, you then need licensing to expand and contract out to contract sewers?

This is an old entry. The law covers ANYTHING made with a sewing machine. The state of California is rather humorless when people have thought they don’t need a license just because the law was named poorly. Contract sewing businesses MUST have a license too. Just as you cannot hire someone without a license, they cannot legally take your work if you don’t have one either. Sewing from home for profit (other than custom clothiers) is strictly illegal in CA. See the other entries in this series.

Leslie
December 4th, 2008
9:07 AM

I am just a bit confused then. On the state of california’s site, it states this as the law:
“Garment manufacturing” means 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, scarfs, 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 consistent with the purposes of this part. Labor Code Section 2671(b)
.
The article I make is not “worn”. It is a bag used for wet items hung in the laundry room or bathroom. Is your interpretation that this law is for everything? Just want to make sure before I put myself out there for penalties now…

Kathleen
December 5th, 2008
7:56 AM

Is your interpretation that this law is for everything?

~sigh~ I’m familiar with the wording but it’s not “my” interpretation. It’s not my fault they haven’t resubmitted the wording of the legislation to state representatives for reapproval. That is typically not done because the normal course of affairs is to go to the state supreme court and nobody is going to fight it because if you look under the rules and regulations governing implementation that was developed from the legislation, you can see it’s there. I’m not going to drag out the subsection that further elucidates because it’s a waste of my time when I get nothing out of it. I don’t have a dog in this fight. I don’t live there, I don’t send work there, and I don’t make a dime convincing you to become compliant. It’s not my law, rules or opinion.

You have much more to gain by contacting them than me.

Leslie
December 5th, 2008
8:18 AM

Thanks Kathleen! Someone referred me to your blog and stated that there was a lot of informative information so I posted for advice as you were well recommended by some manufacturing consultants that I know. Thank you for your help!

Kathleen
December 5th, 2008
8:22 AM

Hey Leslie, I just went by your site…uh… have you been keeping up with all the CPSIA stuff? I think you have bigger fish to fry right now… See the front page.

Leslie
December 5th, 2008
8:32 AM

Oh yeah, there’s big hoopla about that. Actually there is an organization for cloth diaper manufacturers called the RDIA. It’s a new entity as of last year. Cloth diapers are sometimes considered clothing, sometimes not, depending on the agency. The RDIA have legal working on it right now. I don’t think my bag will be classified as a “children’s product” as we sell to gyms, etc. But everything we sell will have to be in compliance. It’s a bit crazy. So much for “helping” the economy grow…

All of the baby products we sell will have to have compliance certificates; such items as Baby Legs, and more! I’m not 100% convinced that the product we actually manufacture falls into the “test and comply”. I do know this, some major diaper manufacturers have started doing this testing anyways, to the tune of $200.00 per test per color, which comes to $400.00 per fabric. So if you have 25 fabrics, zippers, snaps, we’re talking the tens of thousands of dollars for testing and more!

Kira
February 23rd, 2009
11:17 AM

After reading all of these comments, no one has actually answered the question — if you are sewing from home and are the ONLY person sewing for your business and you’re not outsourcing anything, do you need to take this test and get certified as a CA garment manufacturer? I decided to write to the CA state dept (I am in SF).

I make dog clothes and I’m the only person sewing/making the garments, so I wasn’t sure if any of this applied to me. This is what they wrote back:

First of all, the regulations on ‘garment’ manufacturing involves the manufacture human garments – see Labor Code § 2671(b) “. . .wearing apparel or accessories designed or intended to be worn by any individual . . .”; the ‘individual’ (under common definition) means a person – not an animal.

Secondly, the prohibition against industrial homework is against any employer that allows or suffers an employee to take such work home, or for such employees to manufacture such articles in their own home. You state that this will be your business and that you will not be using employee labor. There is no regulation about where an individual works for him/herself; the prohibition is against employee labor working from home (in industrial homework) and against the employers who permit such behavior.

You provided the definition of industrial homework [Labor Code § 2650(d)] but you apparently failed to realize the meaning:

“The definition of industrial homework is as follows: means any manufacture in a home of materials or articles for an employer when such articles or materials are not for the personal use of the employer or a member of his or her family.” (Emphasis added). Your query indicates that you will be working for yourself, for your own business – not for an employer. Therefore, the work you describe is not ‘industrial homework’. Should your business grow; you could not contract out to anyone working from home, nor could you employ someone to work from their home; you’d have to establish a regular place of business for such work.

Hope this helps! I feel pretty relieved now…

Kathleen
June 6th, 2009
5:45 AM

I have an announcement, hope you can help this attorney who called me from the venerable Institute for Justice; it’d be to everyone’s advantage who works out of California. His email address has been omitted but is included here in the forum. If you are not a member but would like to respond, you can either call or snail mail him or and I will forward your response.

Kathleen,

Thank you so much for speaking with me about California’s garment manufacturing law this afternoon. As I mentioned when we spoke, we are conducting research for a series of reports on city and state regulations that create barriers for entrepreneurs in certain occupations. I would be very interested to hear from any of your members who have experienced problems because of California’s garment law. More specifically, I’d be interested to hear from anyone who’s been warned or cited by the government for not complying with the various requirements, such as the state certification requirement or the effective prohibition on working in your own home. I’d also be interested to hear from anyone who may be in compliance with the law now but who couldn’t comply when they were just starting out because of the economic, administrative, and other burdens the law imposes. Basically, I’d appreciate the opportunity to chat with anyone whose right to earn an honest living has been burdened by this law.

The focus of the particular study I’m working on is Los Angeles, so I’d be really interested in hearing from folks there, but I’d welcome the chance to speak with others as well.

Finally, I should mention that one of the main goals in preparing these reports is to illustrate the negative impacts that laws like these have on entrepreneurs and small businesses and to encourage state and local governments to revisit the laws so that people may be free to earn an honest living free from unreasonable government regulation.

Thanks so much for your help, Kathleen!

Michael Bindas

Staff Attorney
Institute for Justice Washington Chapter
101 Yesler Way, Suite 603
Seattle, Washington 98104
phone: (206) 341-9300
fax: (206) 341-9311

howard
June 9th, 2009
8:04 PM

I have a question. I am an out of state company having some things made in California. When being informed of the requirement, I did research and noticed the company I was using was not on the data base of licensees. Also, almost no company in the building he is in was on the data base either (ans it’s a big building in the fashion district) Why is that? Are there a huge number of manufacturers that do not comply? Is the state search engine incomplete?

Bridget Guzzi
July 24th, 2009
11:49 AM

What a wonderful information source / discussion site. It is made clear that doing the right thing is imperative if you wish to enjoy the growth of your business.
Those who do not stay in compliance actually push up the rates for those who do. We can bring costs down and fight squarely if we remain in compliance. There – in – after they will have to listen to us about these unreasonable costs. In reality we are paying the price for those who willfully disregarded basic employee human and business rights and responsibilities.
The costs for this license are absolutely ridiculous. The squad of investigators that are shutting down non-compliance businesses even more ridiculous. If we get in compliance they will have to spend their time giving us the customer service we deserve, and re-assess their costs in relation to what they are providing “manufacturing”. Remember “we pay them”.

Kathleen
July 24th, 2009
1:45 PM

Speaking of, I’ve heard some recent really nasty stories about field agents citing screen printers in California. These guys don’t even have sewing machines, they just print shirts. Even worse, inspectors are insisting the screen printers clients have licenses…to the tune of outfits like Sun Microsystems. Right, Sun is going to get a garment license just to have polo shirts embroidered with their logo.

It is not a coincidence that the cost of doing business in CA is what is leading to its record breaking job losses in manufacturing over just the past seven years. The jobs are going to Texas.

Jamie
February 24th, 2010
4:28 PM

Garment screen printers and embroiderers in California finally have a chance to make some changes that will exclude our businesses from carrying the label of “Garment Manufacturer” Spot bill AB 2576 has been introduced by Assemblyman Jim Nielsen.

You can see the actual bill here. This is the first chance we as State residents and Business owners have had to voice our opinion. I have just added my name and business to the list of names that will be sent to the Assemblyman. The more names on the list the more weight the bill will carry. You can remain anonymous and still show support as well. The online form is here. Any questions or comments can be directed to the Assemblyman or his staff. That contact information is here.

[...] Tip: If you’re a designer in California, do you have your manufacturer’s license? If you don’t, the state can confiscate your [...]

Jeff Bacon
April 27th, 2010
11:48 AM

First, I have to say that while I understand the intent, the application of this law is just nuts!

Now to the important stuff. In following the thread, one question that wasn’t discussed – that I could find – is whether a designer in California who has all work done out of state requires a license. I’m just having things silkscreened now – although even that may be a problem – but am planning for the future.

Anyone have any experience? As much as I’d like to use local talent, it seems like the state’s making it almost impossible. I’ll also be adding my support to the bill Jamie mentioned – if I’m not too late.

Jill Homiak
August 6th, 2010
9:54 AM

How do we as manufactures do our due diligence to ensure that the contractors are paying wages???

Mansha
September 30th, 2010
4:28 PM

I own an Men’s clothing label and started my business by outsourcing the first collection. I realised how painful it is to get it done overseas when yo have a small production size. I am now planning to do my manufacturing locally. I am based in San francisco, California and have found quite a few contractors here. Do you think I should get the manufacturing done in San francisco or look around for contractors in LA which is more options.

Mari
April 20th, 2011
10:14 AM

Wow, this thread has been incredibly helpful! I found the answers to the questions I had about the necessity of obtaining a garment license that unfortunately I couldn’t find anywhere! I plan to start a very small online clothing company targeted to a small market, so I will be doing all the work myself.
I’ve been reading a couple books about starting a clothing line and the information about legal matters is not thorough enough. I think it would be great to have a section/ chapter dealing with just the legal issues: Manufacturing license, business license, taxes etc. I am interested in reading Kathleen’s book next. Thanks!

[...] all this of course on top of the already onerous garment manufacturer’s law. California has lost a lot of jobs because of it and the recession hasn’t improved matters. [...]

Liam
January 15th, 2012
2:11 AM

I’d like to start designing a childrens line of clothing and accesories and plan to outsource all of the manufacturing. While I will be designing and producing the patterns, everything else will be contracted out. Will I still require a CA Manufacturing license?

Kathleen
January 16th, 2012
10:11 AM

Liam: legally you are the manufacturer. [That's the law and not subject to semantics or quibbling over definitions.] As such, yes. You need a license. Insult to injury, you need to comply with the CPSIA law -which is federal.

Christine
October 13th, 2012
9:51 AM

My husband and I have applied for garment manufacturing permits that last 3 years. We screenprint t-shirts in our garage and have no employees. We sell shirts on our website, to local stores and at our booth at music festivals. In the past we have applied as a manufacturer, but based on the language it seems like we might actually be contractors instead of manufacturers. There is of course a huge difference in fee. Can anyone shed light on this?

Kathleen
October 13th, 2012
6:32 PM

You’re only a contractor if your business is providing services to manufacturers.

Quincunx
March 14th, 2013
9:45 PM

On a whim, I decided to follow up on Irene’s post about the folks in Sacramento not even knowing about this. There’s six license-holders in the city proper, all manufacturers, and just over double digits if you include the one or two from every city in the area, which are not all manufacturers–and no overlap with the “sewing contractors” entry in the Yellow Pages (a misfiled dry cleaner) or “clothing wholesale & manufacturers”.

steph
July 15th, 2013
6:21 PM

Hi,

Does a designer that is hiring a manufacturing company to produce the item need a certificate of Labor.

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