Targeted Industries Partnership Program
A Joint Enforcement and Educational Effort in the Agricultural and Garment Industries

Fifth Annual Report
1 9 9 7
and retrospective 1993-1998

California Department of Industrial Relations
John C. Duncan, Director
Jose Millan, Labor Commissioner


CONTENTS


EXECUTIVE SUMMARY Go Back to Table of Contents


The Targeted Industries Partnership Program (TIPP) began operating as a pilot project in 1992, on recommendation from Governor Wilson's Farm Worker Services Coordinating Council, to address labor law issues in the agriculture industry and soon thereafter in the garment industry. Given its success over the years, the Governor authorized 24 additional positions for the unit in 1996 and provided a permanent source of funding. In 1997, the Governor authorized additional funding to expand TIPP education and enforcement activities into the restaurant industry, where violations of laws including minimum wage, mandatory workers' compensation insurance coverage, overtime, and record keeping are also evident.

TIPP education and enforcement efforts are intended to enhance fair business competition by targeting non-compliant employers who, through violation of labor, tax and safety and health laws, create an unfair competitive advantage for themselves at the peril of law-abiding employers and workers employed in the targeted industries. At the helm of TIPP is the Department of Industrial Relations/Division of Labor Standards Enforcement (DLSE) which partners with Cal/OSHA, the Employment Development Department (EDD) and the U.S. Department of Labor (USDOL), as well as with other state and local agencies, which share resources and information in their targeted education and enforcement activities.

In 1997, TIPP increased enforcement efforts in both the garment and agriculture industries. The combined DLSE and USDOL inspections totaled 1,781 in 1997, compared to 1,237 inspections in 1996, and TIPP recovered $1,869,168 in wages for garment and agricultural workers in 1997. In the five year period from 1993 through 1997 there were a total of 6,239 workplace inspections, 4,986 civil citations and 319 criminal citations issued.

In the Garment Industry, TIPP targeted the worst violators in an effort to create a level playing field for law-abiding employers. In 1997, TIPP targeted the employers in the underground economy and DLSE issued 192 cash pay citations in the garment industry. Furthermore, DLSE issued 47 minimum wage citations. Inspections increased to 1,326 in 1997, almost double that of 1996. The total garment citations issued in 1997 was increased to 1,189 from 868 in 1996. Penalties collected in 1997 totaled $1,257,337.

In the Agricultural Industry, TIPP conducted 455 inspections, issued 34 cash pay citations and 31 minimum wage citations. A total of $122,376 penalties were collected.

During the calendar year 1997, DLSE and the USDOL collected $1,457,234 in wages on behalf of garment workers, and $411,934 on behalf of farm workers.

In the five year period between fiscal years 1993-94 to 1997-98, TIPP has reaped $42.4 million in benefits to California.




A TIPP SYNOPSIS Go Back to Table of Contents


What is TIPP?

TIPP is the acronym for the Targeted Industries Partnership Program, which combines and coordinates resources from federal, state, and local agencies to enforce labor laws and educate employers and employees about those laws. TIPP currently targets the garment manufacturing, restaurant and agricultural industries, which have long histories of labor law, employment tax, and safety and health violations. TIPP's four lead agencies the California Division of Labor Standards Enforcement (DLSE), the Division of Occupational Safety and Health (Cal/OSHA), the California Employment Development Department (EDD), and the U.S. Department of Labor, Wage and Hour Division (USDOL) develop TIPP's agenda and recruit and coordinate other state and local agencies to participate in that agenda. TIPP has coordinated up to twelve agencies in a single enforcement action. TIPP is now an ongoing program coordinating state, federal, and local agencies in garment manufacturing, agriculture, restaurants, and other industries that the agencies jointly select.

TIPP's Beginnings and Growth

Emanating from Governor Wilson's Farm Worker Services Coordinating Council, TIPP began operating in November 1992, as a joint enforcement and educational outreach program, with the charge of bringing about compliance with state and federal labor laws to the garment manufacturing and agricultural industries. Its three founding agencies were DLSE, EDD and USDOL. In 1996, DLSE received an augmentation in its baseline budget to continue to fund the TIPP program through fiscal year 1997/98. Additionally, in recognition of its innovative use of state, local, and federal resources to accomplish its objectives, TIPP was the recipient of the Innovations Award, bestowed upon it by the Council of State Governments in 1996.

The TIPP Philosophy

Due to last year's budget augmentation, TIPP can be more effective in deterring violations through prevention, specifically through aggressive educational outreach efforts to various industries. TIPP is designed to enforce existing laws more effectively and efficiently by sharing the resources of those governmental agencies that have an enforcement or educational mission in the targeted industries. For example, rather than performing multiple, uncoordinated investigations, one agency may perform an audit and share the results with other TIPP agencies, preserving taxpayer dollars and reducing unnecessary, redundant governmental intrusion.

The TIPP Mission

TIPP seeks to effectively target the underground economy and enhance fair business competition. TIPP works to improve workers' lives by eliminating the unfair competitive advantage noncompliant employers create for themselves by evading labor, employment tax, and safety and health laws. To accomplish these goals, TIPP seeks to achieve compliance with those laws by employers in the targeted industries by leveraging the remedies of each participating agency to maximize their effectiveness. For example, a garment manufacturer must be registered with DLSE before he or she can operate legally, but the applicant must first demonstrate that he or she does not have an outstanding wage assessment, unpaid civil penalty, or an employment tax liability, among other criteria. Under the TIPP program, an applicant who, for example, owes back wages under a USDOL assessment, will not be issued a state license or be allowed to operate unless he or she arranges to pay the back wages owed under the federal assessment.

The TIPP Organization

TIPP is jointly administered by state agency representatives from DLSE, Cal/OSHA, EDD and USDOL. In order to coordinate agencies with different regulations, laws, and protocols, TIPP vested considerable day-to-day operational authority with statewide coordinators and experienced supervising investigators from both DLSE and USDOL. The coordinators plan specific focused enforcement actions, provide a centralized and reliable system of communication and rapidly resolve differences between agencies.

The state coordinators are responsible to the Planning Group which consists of senior managers from DLSE, Cal/OSHA, EDD and USDOL. The Planning Group meets regularly to review the overall effectiveness of TIPP and considers ideas solicited from the public in TIPP's educational outreach forums.

TIPP provides joint training sessions for investigators from the principal participating agencies and encourages investigators from one agency to support others by interviewing or providing translation services when the enforcement action warrants. As investigators learn the laws enforced by the other agencies, they can spot violations and make the appropriate referral.

TIPP Constituencies

TIPP serves three constituencies law-abiding employers, employees, and taxpayers and stresses that the interests of these constituencies need not be mutually exclusive. This belief continues to affect each of TIPP's actions. Taxpayers desiring minimum safety and health standards are relieved from repeatedly paying for enforcement actions because of the coordinating efforts of the participating agencies. For example, rather than having agencies perform multiple, independent investigations of a business (as was the case in the past), TIPP assigns a single agency to perform an investigation and shares the results with its participating agencies. TIPP has also dramatically reduced taxpayer liability through its effective enforcement of workers' compensation insurance requirements, because taxpayers are liable for industrial injuries or illnesses that occur when an employer is uninsured.

TIPP promotes educational programs for employers relating to labor, safety and health laws, and helps employers to avoid liability arising from unintentional violations.

TIPP has recovered millions of dollars in earned and unpaid wages for California's poorest workers. TIPP has also helped ensure that these employees work in a safer environment, know their rights under the law and are familiar with the various agencies that enforce applicable regulations.

TIPP Enforcement Actions

TIPP conducts unannounced "sweeps" which coordinate a large number of agencies and their agents in a concentrated enforcement action in a specified region. The sweeps require extensive planning and cross-training of employees from various jurisdictions. TIPP investigators also conduct inspections pursuant to individual employee complaints at specific businesses on an ongoing basis. Both the sweeps and the individual inspections cover wage and hour issues, occupational safety and health, housing conditions, child labor, employment tax, field sanitation requirements, and workers' compensation insurance coverage.

An innovation that began in 1997 was the adoption of more frequent "sweeps," consisting of smaller, more mobile teams. This approach has allowed teams of TIPP investigators to maximize its enforcement presence and to conduct more field inspections as a result.

TIPP Educational Outreach Efforts

From the beginning, TIPP recognized that effective enforcement depends on effective education of both employers and employees. In pursuit of this goal, TIPP has initiated the following:

These Associations cooperate in concert with governmental agencies, including DLSE and USDOL, to achieve a higher level of compliance with labor standards. In addition, they frequently conduct educational seminars for their membership.

TIPP distributes two booklets that it developed for employers in its first yearA Summary of Some Basic California and Federal Employment Requirements for Agricultural Employers and A Summary of Some Basic California and Federal Employment Requirements for Garment Industry Employers, which is now available in five languages, Spanish, Korean, Thai, Chinese and English.

Participating agencies provide a variety of materials not specifically developed for TIPP, but which TIPP may distribute. For example, DLSE publishes the Study Guide to Laws and Regulations Affecting California Farm Labor Contractors as part of its licensing program for farm labor contractors. The Guide summarizes farm labor laws and regulations (including many federal standards) and provides a glossary and a directory of important telephone numbers. DLSE also produced a pocket size Workers' Rights booklet in the five languages listed above, and a Labor Standards and Regulations brochure exclusively designed for eating and drinking establishments. Presently an outreach video is in production. The video will highlight aspects of employer compliance with labor laws and will include footage of actual workplace inspections. Cal/OSHA publishes many helpful materials, especially relating to the written Injury and Illness Prevention Program, a program required of all California employers. EDD provides copies of its Employers' Guide and the Department of Labor provides reprints of federal labor laws and regulations.

Finally, the law requires employers to display several posters describing employee rights in the workplace. For example, the state requires that the Industrial Welfare Commission Orders, which detail basic wages, hours, and working conditions for employees, be posted in every place of employment where workers can read it easily. Other required postings relate to safety and health, minimum wage, workers' compensation insurance coverage, as well as agricultural pesticide warnings and housing requirements. Checking for these postings is an integral part of every TIPP enforcement action, whether it is a sweep or an inspection arising from an individual's complaint.

The Farmworker Hotline is 1-800-733-3899. TIPP recognized that farmworkers, who often labor in fields remote from governmental agencies, needed special accommodation for their grievances. Consequently, TIPP developed a toll-free telephone hotline staffed by bilingual professionals to receive farmworker questions and complaints.

The Garment Hotline is 1-800-803-6650. It soon became apparent to the program coordinators that a statewide hotline for the garment industry was also necessary so that employees and employers could report suspected violations to TIPP. In 1996, a garment hotline was established.

The TIPP Partnership Web

TIPP has also begun to develop partnerships with agencies that do not participate directly in TIPP enforcement or education efforts. TIPP shares information with other agencies pursuant to formal Memoranda of Understanding (MOUs). TIPP has developed MOUs with the Internal Revenue Service and the State Franchise Tax Board. TIPP has also developed similar MOUs with labor agencies in other states that have similar agricultural and garment manufacturing industries.


TIPP PROGRAM AUGMENTATION Go Back to Table of Contents


Augmentation for State fiscal year 1996-97 funded expansion of DIR's efforts in the TIPP program. Aimed at enforcing employment laws in the garment manufacturing industry, it added 24 additional staff to the enforcement program. Most of these new positions for the expanded TIPP Unit are located in Southern California, primarily in the Los Angeles and Santa Ana DLSE offices.

The USDOL hired new investigators in the State of California, with most of those positions located in Southern California. The majority of these new positions were intended to increase the number of bilingual investigators, particularly in the Cantonese, Vietnamese, Korean and Hispanic language areas. Having such capabilities enhanced education/outreach and investigative efforts in the garment and agriculture industries. A new district office in West Covina opened with field offices in Ontario and Long Beach.

On November 3, 1997, DLSE opened a sub-office of the Licensing & Registration Unit in Los Angeles at 107 South Broadway, Room 5029. This office will serve as a liaison to the garment community in Southern California to facilitate the processing of garment manufacturing applications, to advise applicants on registration requirements and to check on the status of the applications that have been submitted to DLSE Licensing headquarters office in San Francisco. This office has bilingual staff to offer assistance to applicants who speak Spanish, Chinese or Korean.

In December 1997, the DLSE Licensing & Registration Unit started producing and issuing the garment registrations on non-copyable paper. The original registration is printed on special security paper that indicates "VOID" when illegally reproduced. This serves to reduce the use of fraudulent registrations that the Division has found to be a problem in the industry.

Finally, in order to test an individual's knowledge of wage and hour issues and safety and health practices in the garment industry, the Licensing Unit introduced a new garment exam in three versions and in five languages. This will help assure that only individuals who possess the appropriate character, competence and responsibility are issued garment manufacturing registration certificates.


MEASUREMENTS OF SUCCESS:Go Back to Table of Contents


Employee/Employer Outreach

Many employees are recent immigrants, without access to information concerning their rights as workers, or to the enforcement agencies that exist to assist them with their wage and hour problems.

Many businesses that violate the laws do so out of ignorance of their responsibilities as employers. As part of TIPP's educational effort, it is standard operating procedure that after each inspection all the TIPP partners participate in a "closing" conference with the employer to disclose the findings of the inspection and answer any questions they may have regarding the laws that TIPP enforces. Also, in the course of the inspection, TIPP investigators routinely interview the workers to ascertain if the employer is complying with the wage, safety and health laws and to answer any questions that they may have.

In an effort to avoid duplication of effort and to streamline the inspection process, TIPP has developed an Information Fact Sheet that is provided to the garment industry employer upon initial contact. The Information Sheet provides information on each of the TIPP agencies and enumerates the various documents that the employer is required to produce for inspection. A similar Information Fact Sheet has been developed for use in the agricultural industry. In addition, agricultural and garment employers are now provided with a postcard at the conclusion of the inspection soliciting an evaluation of the process and personnel.

An inspection report has also been developed to facilitate the concise gathering of information needed by the various TIPP agencies. This allows a single investigator to make the inspection and serves to economize the employer's time.

One of DLSE's major goals is to identify ways that TIPP can be more effective in deterring violations through improved detection and enforcement. To this end some of the following procedures to combat illegal activities have been implemented:

Criminal Prosecution

One of the more disturbing situations encountered in the garment industry in Southern California is the ability of some businesses that are cited to close down and open under a new name across town. Such businesses are prime targets under the TIPP program for criminal prosecution, inasmuch as their actions present a willful disregard of the labor laws regulating the garment industry. Only swift, effective criminal prosecution can serve as a deterrent to their continuing violations.

TIPP's success in the agricultural industry points to the overall decrease in the number of firms in violation.

Under the current staffing augmentation and through closer coordination with local governmental authorities, TIPP can more easily detect and keep track of businesses that have been cited, who have closed down and have then re-opened elsewhere. Additionally, as a result of increased staffing, it will become easier to subject these businesses to criminal prosecution.


ENFORCEMENT STATISTICS Go Back to Table of Contents


In 1997, TIPP increased enforcement efforts in both the garment and agriculture industries. The combined DLSE and USDOL inspections totaled 1,781 in 1997, compared to 1,237 inspections in 1996, and TIPP recovered $1,869,168 in wages for garment and agricultural workers in 1997. In the five year period from 1993 through 1997 there were a total of 6,239 workplace inspections, 4,986 civil citations and 319 criminal citations issued.

In the Garment Industry, TIPP targeted the worst violators in an effort to create a level playing field for law-abiding employers. In 1997, TIPP targeted the employers in the underground economy and DLSE issued 192 cash pay citations in the garment industry. Furthermore, DLSE issued 47 minimum wage citations. Inspections increased to 1,326 in 1997, almost double that of 1996. The total garment citations issued in 1997 was increased to 1,189 from 868 in 1996. Penalties collected in 1997 totaled $1,257,337.

In the Agricultural Industry, TIPP conducted 455 inspections, issued 34 cash pay citations and 31 minimum wage citations. A total of $122,376 penalties were collected.

During the calendar year 1997, DLSE and the U.S. Department of Labor collected $1,457,234 in wages on behalf of garment workers, and $411,934 on behalf of farm workers.

In the five year period between fiscal years 1993-94 to 1997-98, TIPP has reaped $42.4 million in benefits to California.

Garment Manufacturing

Year Inspections
Conducted
Child Labor
Citations
Workers' Comp
Citations
Cash Pay
Citations
Minimum
Citations
Penalties
Collected
Wages
Collected
1993 414 15 140 65 14 $253,432 $1,250,353
1994 500 12 122 73 15 $372,224 $2,159,964
1995 703 41 99 74 25 $1,111,292 $3,104,935
1996 748 24 94 172 54 $958,035 $4,225,979
1997 1,326 14 196 192 47 $1,257,337 $1,457,234

Combined data from DLSE and USDOL

Agriculture

Year Inspections
Conducted
Child Labor
Citations
Workers' Comp
Citations
Cash Pay
Citations
Minimum
Citations
Penalties
Collected
Wages
Collected
1993 647 153 99 19 11 $142,302 $529,042
1994 589 74 62 19 18 $97,108 $414,557
1995 368 64 23 9 15 $135,546 $313,000
1996 489 65 59 25 19 $139,575 $446,096
1997 455 39 26 34 31 $122,376 $411,934

Combined data from DLSE and USDOL

Cal/OSHA

Agriculture

Inspections

Violations Cited

Penalties Proposed

164

256

$103,789

Garment Manufacturing

Inspections

Violations Cited

Penalties Proposed

389

2054

$554,128

Employment Development Department

Garment Industry Investigation * Data
Joint Investigations 152
Payroll Tax Referrals 81
Completed Payroll Tax Audits 37
Total Assessments $ 1, 141,785
EDD Average Assessment $ 30,859
Previously Unreported Employees 739
Previously Unreported Wages $9, 368,640

*EDD participates in joint investigations when there is a likelihood of substantial amounts of unreported wages.