2022 is the year that legislation takes on fashion. Over the last two years in the US, three key laws have been introduced to attempt to regulate the industry, which until now has been allowed, and even encouraged, to operate unchecked. The Garment Worker Protection Act, Uyghur Forced Labor Prevention Act, and Fashion Sustainability Act have been introduced in response to environmental and ethical scandals that have come to light in recent years, aiming to apply punitive measures to ensure that fashion brands aren’t complicit in these issues.
But why now? “There has been an awakening around these issues, especially with the human rights violations and the emission gap. Now more than ever before, there is a sense of urgency to act, as the current plan is not going to achieve a 1.5 degree reduction target,” explains Marianne Uddman, head of sustainability and innovation at TrusTrace. “That’s why the governments are taking a stand and enforcing laws and regulations. There had been some voluntary recommendations previously, but they haven’t changed anything.” Uddman believes that a change in government, campaigning from advocacy groups, and consumer pressure has also accelerated the introduction of these laws.
“In theory, the penalties can be significant – up to 2% of your turnover – and that can be quite a large sum”
Currently, these laws are being unpicked by industry leaders to understand their potential implications. It’s likely that brands caught failing to adhere to the laws could face fines and supply chain delays due to goods stuck at borders, but repercussions could be as extreme as facing criminal action. “In theory, the penalties can be significant – up to 2% of your turnover – and that can be quite a large sum,” says Uddman. While there is still uncertainty around the implementation of these laws, the industry is certainly sitting up and paying attention. “Legislation makes a lot of brands move, we can see that it’s stirring something up,” says Uddman. “They want to do the right thing, but how that’s going to happen is still unclear.”
Here is what you need to know about the 3 major laws taking effect in the US now.
The Garment Worker Protection Act
This law is relevant to brands that produce clothing in California. LA has the highest concentration of garment workers in the country, with 2,000 factories and 40,000 garment workers creating clothing for American brands. Until this law was passed in December 2021, garment workers were paid a piece rate, which could be as low as $.03 per assembly operation (for example: sewing a sleeve) meaning that their weekly income would fluctuate dramatically, and would be far below the minimum wage. Brands and manufacturers have historically avoided liability for unpaid or unfair wages by working with multiple layers of subcontractors in their supply chains; this law seeks to establish a more effective system to impose sanctions on brands caught paying a piece rate in California.
This law is effective as of January 2022, ensuring that garment workers in California are paid an hourly wage no less than the minimum wage, and extends the definition of garment manufacturing to ensure that all activities (and therefore workers) involved in a garments production are covered by the law. Brands, manufacturers, and contractors are liable for the wages owed to all garment workers in the supply chain.
All employers engaged in garment manufacturing in California must keep records of all employees for four years. If brands or manufacturers are caught continuing to illegally pay workers a piece rate, they will be subject to compensatory damage of $200 per employee for each pay period in which the employee is paid by piece rate.
For more information about The Garment Worker Protection Act, click here.
Uyghur Forced Labor Prevention Act
In late 2019, numerous investigations into the detention of Uyghur Muslims in the Xinjiang region of China revealed that fashion’s cotton supply chains were complicit in the forced labor of at least 80,000 Uyghur people. Some of fashion’s biggest brands were found to be acquiring cotton from this region. It’s believed that roughly 1 in 5 cotton garments in the global market have involved Uyghur forced labor in the supply chain.
In response, the US has introduced the Uyghur Forced Labor Prevention Act, which seeks to prevent cotton produced in the Xinjiang region (XUAR) from entering the country until importers can prove that forced labor has not been exploited in the supply chain. The law will come into effect from the 21st of June, 2022.
The law will come into effect:
21st of June
If imported products originate from XUAR or are suspected of this, they will be detained by the Customs and Border Protection. To secure release, the importer is required to demonstrate that their shipment has not been produced by forced labor in XUAR, provide a certificate of origin signed by the original seller or manufacturer, and provide a detailed statement disclosing the entire supply chain from bale to final product. Failure to comply with the incoming legislation will result in possible criminal penalties and fines of up to $250,000 or twice the amount of the transaction in question.
Interestingly, the US is the only country to impose restrictions on Xinjiang cotton, but as a leading marker in the fashion industry, the impact of these laws will be felt around the globe. “I haven’t seen anything like that in Europe,” says Uddman. “If you think about it, most large companies will be importing to the US, so they’ll be affected one way or another, even if the rule doesn’t exist in Europe.” Investing in supply chain mapping and traceability will be crucial for companies to mitigate any potential losses.
For more information about the Uyghur Forced Labor Prevention Act, click here.
New York State Fashion Sustainability and Social Accountability Act
Introduced in early 2022, this bill, commonly referred to as the Fashion Sustainability Act, aims to hold fashion brands accountable for their environmental and social impact. It will require brands to map their supply chains, identify the suppliers creating the most impact, and put in place measures to reduce their impact. A focus on transparency is baked into this bill – brands will be required to publish this information on their websites.
Fashion companies with over $100 million in revenue that sell within the state of New York, will be impacted if this bill becomes law. Considering that New York is the US epicenter of fashion, the world’s top brands will be impacted. But the implementation of the Fashion Sustainability Act will be a huge endeavor for most brands.
“From our understanding, the bill says that you have to trace at least 50% of your supply chain by volume, but it is incredibly complex and takes many months or even years to fulfill.”
The relevant businesses will be required to map at least 50% of their suppliers by volume across all tiers of their supply chain in order to identify the high-risk players. Businesses will then set and disclose annual carbon emission reduction targets, publishing a yearly progress report on the application of these policies. Failing to do so could result in brands being fined 2% of annual revenues. The Act is ambitious, going further than any previous legislation to create transparency and accountability, but this poses its own challenges. “In theory it’s great, but in practice it’s very challenging,” says Uddman. “From our understanding, the bill says that you have to trace at least 50% of your supply chain by volume, but it is incredibly complex and takes many months or even years to fulfill.”
For more information about the New York State Fashion Sustainability and Social Accountability Act, click here.
While it’s encouraging to see ambitious legislation being introduced to this leading fashion market, time will tell if these measures will be more than just words. “I’m doubtful of the implementation of some of these laws,” says Uddman. She cites supply chain laws that were introduced into France in 2017, which brands routinely find ways to circumvent through flimsy documentation without any serious consequences.
While greater legislative action is important, a unified approach may be more effective in tackling this global problem. “I want to see a more globalized attempt,” says Uddman. “Right now, we’re working on 30 different laws, and that is so fragmented. They don’t always fit together. It’s impossible for companies to keep track of it, it’s impossible for companies to adhere to all these laws and regulations.” Perhaps a more regional outlook on regulation could help brands to comply.
Sign up with your email address to receive news and updates.
By submitting this newsletter request, I consent to TrusTrace sending me regular website updates and occasional marketing e-mails.