Unraveling the FABRIC Act: What Its Third Trip Through Congress Means for Fashion Brands and Manufacturers

That is the reach of the Fashioning Accountability and Building Real Institutional Change (FABRIC) Act, reintroduced on September 14 during New York Fashion Week. The bill would replace piece-rate base pay with an hourly wage floor, impose joint and several liability on broadly defined “brand guarantors,” require annual federal registration of domestic garment manufacturers and contractors, and authorize $100 million in reshoring grants. The proposal has twice stalled in committee, but its expanding scope and organized labor backing signal that the issues it targets are not going away.

Background                   

Representative Jerrold Nadler and Senator Kirsten Gillibrand first introduced the FABRIC Act in 2022 during the 117th Congress. They reintroduced it in September 2023, but neither version moved beyond committee. The September 2026 draft marks the Act’s third trip through Congress.

The proposal would amend the Fair Labor Standards Act of 1938 (FLSA). Its central target is piece-rate compensation in the garment industry, i.e., pay based on each hem, seam, or button produced, which sponsors say can push wages below applicable minimums. Sponsors also point to wage theft and unsafe conditions among the more than 75,000 US garment workers the bill is intended to protect.

California’s Garment Worker Protection Act, enacted in 2022, already imposes comparable restrictions and extends wage liability to brands. The federal bill would apply a similar framework nationwide. 

Key Provisions

Hourly Wage Protections and Limits on Piece-Rate Pay

Proposed FLSA Section 8(a)–(b) would bar piece-rate base pay for covered garment employees and require at least the federal minimum wage ($7.25 per hour), subject to any higher state or local minimum. For the first time, the 2026 draft expressly states that productivity bonuses may be measured by output, piece, or unit, provided they supplement rather than replace the hourly floor. Earlier versions allowed incentive-based bonuses but did not address this point directly. A limited exception may apply where a bona fide collective bargaining agreement meets specified wage, overtime, and dispute-resolution conditions.

Brand-Guarantor Joint Liability

Proposed Section 8(c) would make a “brand guarantor” jointly and severally liable with the employer for FLSA violations affecting workers who produce that brand’s goods. The definition is broad: any person who contracts for garment manufacturing, including through a brand- or name-licensing arrangement, regardless of whether it manufactures garments itself. Liability follows the work through successive subcontracting layers, with no minimum revenue or headcount threshold. Affected workers could recover unpaid wages, an equal sum in liquidated damages, and other appropriate relief. A brand guarantor may assert a “no knowledge” defense, but the bill leaves “knowledge” undefined, creating uncertainty about how much oversight is enough.

Annual Manufacturer and Contractor Registration

Starting six months after enactment, every domestic garment manufacturer and contractor would need to register annually with the US Department of Labor (DOL). Applications would require detailed business, ownership, employee, and subcontracting information, including Social Security numbers for certain owners, officers, and shareholders; photo identification for owners, partners, and officers; evidence of workers’ compensation insurance; and a fee of at least $200. The DOL could suspend or revoke registrations and impose civil penalties of up to $50 million for violations. Given the sensitivity of the required data, registrants may want to establish secure collection, access, and transmission processes.

A New Federal Office and $100 Million Grant Program

The bill would create an Office of the Garment Industry inside the DOL, headed by a new undersecretary.

A separate grant program, which doubled in the 2026 draft to $100 million, up from $50 million, would offer competitive awards of up to $5 million each to US garment manufacturers and workforce-development nonprofits for training, equipment, facility improvements, and safety upgrades. Priority would go to unionized and minority-, women-, or veteran-owned operations. Congress would still need to appropriate the funds.

Scope, Enforcement, and Timing

“Garment” extends beyond clothing to accessories such as handbags, hats, gloves, hosiery, ties, scarves, and belts. The wage and liability rules would take effect six months after enactment. The proposal is limited to domestic production and would not reach overseas workers.

Practical Considerations

Supply-chain visibility may become a liability control. Brands and retailers with US production may want to consider whether they can identify each manufacturer, contractor, and subcontractor that touches their goods. A reliable facility map, tied to specific styles and production runs, could support both compliance and any future “no knowledge” defense.

Contracts may need operational controls, not just representations. Manufacturing and licensing agreements may warrant review to determine whether they adequately address subcontracting approval, hourly-pay compliance, payroll records, registration status, audit rights, remediation, and indemnification, and how those requirements flow down through each contracting tier.

Cost and sourcing models may change. A shift from piece-rate base pay to hourly wages could affect unit economics, lead times, staffing, and production incentives. Brands, retailers, and manufacturers may want to model those effects before negotiating future pricing or reshoring commitments. Productivity bonuses may remain available, but they would not substitute for the hourly floor.

Key Takeaways

The FABRIC Act, if enacted, would raise significant compliance, contracting, and liability questions for fashion brands, retailers, manufacturers, and licensors with US production, including:

• Supply-chain mapping and joint liability exposure. Understanding which domestic facilities and subcontracting tiers could trigger brand-guarantor liability under the bill’s broad definitions.
• Wage and hour compliance. Evaluating whether current compensation structures for US garment workers, including any piece-rate or production-based incentive arrangements, would meet the bill’s hourly wage floor requirements.
• Manufacturing and licensing agreements. Reviewing whether existing contracts adequately address subcontracting approval, registration obligations, audit rights, indemnification, and flow-down requirements across each contracting tier.
• Registration and data privacy. Navigating the bill’s annual registration regime, including the collection and transmission of sensitive personal information such as Social Security numbers and photo identification.
• Cost modeling and sourcing strategy. Assessing how the shift from piece-rate base pay to an hourly wage floor, combined with joint liability exposure and new registration costs, could affect pricing, capacity, and production planning.
• Legislative monitoring and compliance readiness. Tracking the bill’s progress and, given the six-month implementation window, developing a compliance framework in advance of potential enactment.

ArentFox Schiff is here to help with any questions related to the FABRIC Act.