The FABRIC Act is back before Congress for a third time, and its joint liability provision would make brands answerable for wage compliance at their US contractors. Fashion Law Journal did conversation with Anthony Lupo, Alexis Glynn and Starshine Chun of ArentFox Schiff on what the bill would mean for brands and their supply chains, and on the legal work behind heritage brand acquisitions.
Their answers are published below as provided, starting with an opening note on the bill.
An opening note on the FABRIC Act
While the FABRIC Act includes a $100 million grant program intended to encourage domestic garment manufacturing, the bill may ultimately discourage the onshoring it seeks to promote. Companies bringing production back to the US would take on additional wage-compliance requirements and potential supply-chain liability that they can largely avoid by manufacturing overseas. Meanwhile, the grant program is relatively limited and funding is not guaranteed, since the $100 million is authorized but would still need to be appropriated by Congress. Viewed together, the bill creates new costs and liability for domestic production and then offers a comparatively modest incentive to offset them.
The FABRIC Act is on its third trip through Congress. What has changed, either in the bill or in the industry around it, that makes this attempt different from the last two?
Practically nothing has changed, but bill sponsors are able to point to a working model with California’s law, in effect since 2022, rather than an untested idea.
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The provision brands watch most closely is joint liability for what happens at their contractors. In practice, what would a brand need to be able to prove about its supply chain to live with that?
Supply-chain visibility becomes a liability control. The bill’s proponents believe that brands and retailers with US production should be able to identify every manufacturer, contractor, and subcontractor touching their goods. A facility map tied to specific styles and production runs supports compliance and any future “no knowledge” defense.
Contracts need operational controls, not just representations. Manufacturing and licensing agreements should be reviewed for subcontracting approval, hourly-pay compliance, payroll records, registration status, audit rights, remediation, and indemnification, and for how these flow down each contracting tier.
Cost and sourcing models may change. Moving from piece-rate to hourly base pay could affect unit economics, lead times, staffing, and production incentives, so companies should model these effects before negotiating pricing or reshoring commitments. Productivity bonuses remain available but cannot replace the hourly floor.
If it passed tomorrow, which function inside a fashion company feels it first: legal, sourcing or finance?
Sourcing feels it first, because it’s the team that has to re-map factories and renegotiate terms on Monday morning. Legal is right behind, rewriting vendor agreements and indemnities. Finance feels it last but longest, because cost, reserves and margin assumptions all move once liability can’t be fully pushed down the chain.
California and New York already have garment worker protection laws on the books. What have those taught you about how a federal standard would actually be enforced?
California’s garment laws suggest that a federal FABRIC Act would depend on enforcement capacity. A federal standard would likely need to establish a centralized, nationwide garment industry registry, paired with fines for non-compliance.
For brands that are not waiting for legislation, what does a defensible supplier compliance programme look like right now?
If your practices would hold up under California’s law, that is the closest current model for the proposed federal legislation. That means mapping the supply chain down to every factory that sews the product and keeping contracts, purchase orders and invoices for at least four years, as California requires. It also means paying prices that can cover minimum wage and using supplier contracts with audit rights and indemnities.
Switching to the topic of brand acquisitions: when a heritage house changes hands, what sits at the top of the legal workstream that outsiders would not guess?
The top issue is making the structure work around the IP. These deals rarely hand a brand to one owner. Each needs clear rights to the name for its piece of the business. Most people would not think about the complexity of trademark transfers involved, and the real work is drawing the lines between everyone who will use it.
Archives, trademarks and licence agreements are often the real assets in these deals. Where does diligence most often turn up a problem?
In the gaps between the three. Trademark registrations that lapsed or were never filed in a key market or class. Change-of-control and anti-assignment clauses can let a licensee walk away or renegotiate, and long-term exclusive licenses impede an entire category or territory for years. Archives where nobody can show chain of title to the designs, photographs or sketches. The asset is often there. The paperwork proving you own it frequently isn’t.
For a house being rebuilt after acquisition, how much of what the new owner can do creatively is already decided by the contracts it inherits?
Usually more than most creative directors would like. Long-term licenses often give third parties control of whole categories, such as fragrance or eyewear. Distribution agreements can lock in partners and pricing by territory. Founder arrangements can include approval rights over the name and heritage, and archive images may be licensed only for limited uses. The early years of a rebuild are often shaped as much by which contracts can be renegotiated or ended as by the creative vision, so mapping those exit rights belongs in the deal model.
About the interviewees
Anthony Lupo, Alexis Glynn and Starshine Chun are lawyers at ArentFox Schiff LLP. Firm profiles: Anthony Lupo, Alexis Glynn and Starshine Chun.
For more conversations with the people shaping the business of fashion, read our interviews.
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