How to Identify Garment Sweatshops

The New York State Department of Labor offers this guide to help businesses identify and avoid sweatshops when they seek apparel contractors.

Sweatshops operate illegally as part of the underground economy. They often are fly-by-night operations that can pack and move quickly from place to place, sometimes across state lines.

Sweatshops flourish because of the huge competitive advantage they gain over legitimate businesses that:

• Pay fair wages
• Provide safe working conditions
• Pay taxes
• Contribute to the economic and social health of New York and the nation

Although sweatshops routinely can produce garments at lower cost than honest shops, they have pitfalls. A company that enters into a contract with a sweatshop can incur:

• Civil penalties
• Criminal fines
• Loss of goods produced illegally

Doing business with a sweatshop also means a company runs the risk of damage to its public reputation.

We at the New York State Department of Labor recognize and applaud the importance of the garment industry to our economy.  We hope that you find this guide useful.

These are the basic laws that govern the production of clothing.

"Hot Goods" law

Since 1996, New York State law forbids the sale or distribution of clothing produced in sweatshops.  

We can stop the sale and/or distribution of apparel produced in any shop that:

• Cheats workers out of their wages
• Pays less than the minimum wage

Garments produced without proper payment of wages may be tagged as "unlawfully manufactured" by Task Force investigators.

Wage payments

Manual workers must get their pay weekly, and not later than seven calendar days after the end of the week in which they earned the wages.  With each wage payment, an employee must receive a written statement that shows:

• Hours worked (regular and overtime)
• Rate or rates of pay (regular/overtime)
• How the employee is paid: by the hour, shift, day, week, commission, etc.
• Pay at the piece rate must show what rates apply and the number of pieces at each rate
• Employee's gross and net wages
• Itemized deductions
• Itemized allowances and credits claimed by the employer, if any (tip, meal and lodging allowances or credits)
• Employee's name
• Employer's name, address and phone number
• Dates covered by the payment

If the time needed to complete work at a piece rate drops the wage below the hourly minimum, the contractor must pay the minimum wage.

It is common practice in sweatshops to take a percentage of an employee's wages when they get paid in cash. This is against the law. Employers are not allowed to make wage deductions except those authorized under state and federal law like income taxes and social security. The only other deductions allowed are those for which an employee grants permission in writing, such as:

• Insurance premiums
• Pension or health benefits
• Charitable contributions
• United States savings bonds

Overtime
After working 40 hours, employees must receive overtime at one and one-half times their hourly pay rate. Pieceworkers must receive one and one-half times their average rate after working 40 hours.

Child Labor
Children under the age of 16 cannot work in factories. Employers must keep working papers on the shop premises. Employers must post hours of work for all minors under 18 years of age.

Safety
Factories must comply with state and federal occupational safety and health laws and fire codes. They must keep fire exits unlocked and accessible during working hours.

Registration
All manufacturers and contractors that produce apparel must be registered with the New York State Department of Labor. They must post a registration certificate where employees can see it.

Industrial Homework
Employees may take nothing out of the factory to be worked on in the home. Employers may not distribute work directly to home workers.

Garment industry manufacturers and contractors are required by law to register with the New York State Department of Labor. In addition, when a retailer works directly with a contractor to produce garments, the retailer is considered a manufacturer and must register.

A garment contractor that fails to register is breaking state law and is a sweatshop operation. Because a garment company that does business with sweatshops is subject to possible fines and prosecution, we recommend you tell contractors that you expect them to comply with state and federal regulations as part of their contract with you.

We also recommend that you ask a contractor whether they will subcontract your order. If so, there is a chance that some production might come from sweatshop labor, so we advise that YOU find out who the subcontractors are.

We post our computerized data base on the Internet so that garment businesses can find out whether their current and potential contractors are registered. The data base contains the name and main address (branch locations are not included) of the contractor.

You can find registration data on the Apparel Database <NEED NEW LINK> Or you can call the task force at 1-800-447-3992 to get the same information.

Task Force members investigate apparel manufacturers looking for garment sweatshops. When we do a site visit, we:

• Inspect working conditions
• Review employee records
• Examine registration certificates

To meet registration requirements, contractors must provide workers' compensation insurance. They must also comply with other state laws that govern the production of apparel and accessories to apparel.

The Task Force issues violation notices to businesses that break state laws covering:

• Registration
• Child labor
• Wages and benefits
• Working hours
• Industrial homework

Task Force investigators also may seize materials distributed to "homeworkers."

In addition, when Task Force investigators find sweatshop conditions that seem to violate state or federal safety and health laws, or local building and fire codes, the task force will alert the proper agency.

No single feature marks a garment factory as a sweatshop. However, there are many conditions common to sweatshops. Here are some examples:

Fire hazards

• Only one exit
• Fire exits might blocked or locked
• Fire extinguishers not mounted on the walls or missing from the mounting
• No fire exit signs
• Electrical exit signs not lighted

Electrical hazards

• Wires exposed
• Protective covers missing
• Many extension cords in use
• Wires frayed, unconnected or dangling

Safety hazards

• Machines and fans lack safety guards
• Belts and pulleys exposed
• Steam pipes not insulated
• Aisles less than 36 inches wide
• Trash, clothing or other obstacles block aisles and doors
• Stairs do not have handrails

Health hazards

• Poor Ventilation (heavy dust deposits)
• Employees have hand rashes (toxic dyes or hazardous substances)
• Dirty restrooms
• Bad lighting

Structural dangers

• Elevators work with doors open
• Holes in the factory's floors or ceilings
• Floors sag
• A basement shop with no certificate of occupancy posted

Wage violations

• Employees not paid on time
• Workers do not receive wage statements with their pay
• There are no overtime rates for piecework
• Paydays are missed
• No regular payday
• More employees than timecards
• Time clock broken or not used
• Payments for weekend or overtime work made separately in cash
• Hours on the job not recorded for pieceworkers

Child labor

• Hours not posted for children under 18
• Children under 16 working in the shop
• Young employees give ages that don't match date of birth used
• Children seen outside the factory
• Large increase in piecework totals suggest children may be helping their parents

Industrial homework

• Shop production seems greater than its capacity.
• Employees carry large packages or bags into and out of the factory
• Daily production rates vary
• Parts of clothing (examples: cuffs, collars) might be missing
• Inventory is missing

Registration violations

• No State Labor Department registration certificate displayed
• The wrong employer's name on the certificate

Tax irregularities

• Company's identity changes frequently without a change in officers
• No journal or daybook
• No bank account (the shop uses a person who cashes checks instead of a bank)
• Deliveries come with different names in the address

he New York State Department of Labor's Apparel Industry Task Force holds monthly seminars for:

• Manufacturers
• Contractors
• Retailers
• Business groups

Our aim is to help raise working standards and strengthen voluntary compliance with state and federal laws. Businesses that attend find these seminars useful. They promote new levels of cooperation between government and the private sector. The ultimate winner is New York's garment industry.

Our seminars cover in depth the topics mentioned in this guide. The task force offers specific guidance in many areas. We can tailor our sessions to your needs; we are on hand to help you. Give us a call to schedule a seminar.

Please contact our Apparel Industry Task Force in New York City with questions and comments.

New York State Department of Labor
Apparel Industry Task Force
75 Varick Street, Seventh Floor
New York, NY 10013
Phone: (212) 775-3658