A stitch in time saves nine, but Modesto's Crescent Work & Outdoor learned not having a license to make that stitch could end up losing them more than three months of work and tens of thousands of dollars.
The Modesto uniform and outdoor supply store has been doing on-site embroidery for the past three years.
Employees stitch everything from company logos to law enforcement seals on premade apparel for custom orders.
On June 19, the store received a surprise visit from an inspector with the California Department of Industrial Relations who said it was violating the garment manufacturing labor code.
"I had no idea such a thing even existed," said co-owner Tiffani Stott, whose business has been in her family for 60 years. "I feel it's extremely difficult for small businesses to navigate through the system, especially when most small businesses are struggling right now."
Under California law, all garment manufacturers must have a garment registration certificate allowing them to do on-site work or contract out orders.
But what Crescent and many small businesses do not realize is how broad the state's definition of "garment manufacturing" is.
On the Department of Industrial Relations Web site it means: "Sewing, cutting, making, processing, repairing, finishing, assembling, or otherwise preparing any garment or any article of wearing apparel or accessories designed or intended to be worn by any individual ... for sale or resale."
Alterations are exempt but embroidering or printing anything, even if the business didn't manufacture the original item, falls under that umbrella.
Single owner/employee businesses also are exempt.
Crescent was hit with a $500 fine. To receive its certification, Stott had to pay a $2,500 registration fee, complete a six-page application and pass a certification test. The fee is required annually.
All embroidery work was shut down pending an approved permit.
Crescent's license was approved Sept. 22 and it has resumed embroidery work.
Store took a big hit
But Stott said the three-month wait cost the store $30,000 in revenue and other fees, as the 2-inch-thick folder of paperwork and legal documents she amassed attests.
She said she turned down about 10 requests a day while waiting for approval, in addition to losing untold return business.
She also had to lay off two employees, something she said she wouldn't have had to do otherwise.
"(This regulation) is detrimental for small business in California," Stott said. "It's a lot of red tape and a lot of expense. If I had all that money back I could support another employee."
Stott said the investigator told her the department had received a complaint from a competitor that the store was operating without a license. She said he said the department generally only investigates businesses who have complaints filed against them.
Representatives from the California Department of Industrial Relations did not return calls to The Bee.
Stott also questioned its enforcement based on the original code's intent.
Crescent employs one worker who runs its embroidery machine.
"I feel like they were not enforcing it the way it was designed. It wasn't designed to stop work in a small business," she said. "It was designed to stop sweatshops. I feel we were singled out."
Stott said she called around to other uniform and embroidery businesses she knows across the state and none of them knew they needed a certificate.
In Stanislaus County, only four other businesses — all in Modesto — hold valid certificates, according to the Department of Industrial Relations database. They are 5.11 Tactical, Royal Robbins, T's and Tops, and Image Imprint.
Yet a Yellow Pages search for Stanislaus County pulls up more 20 businesses in the "embroidery" category.
Lea Ann Hoogestraat, manager for economic development at the Stanislaus County Alliance, said she had heard about the certificate before but wasn't aware it extended beyond garment manufacturers.
She said it's these kind of regulations that can discourage small businesses.
"And then they wonder why they can't bring more businesses into the state," she said. "Two to three thousand bucks is a lot of money for small business to pay. It seems kind of punitive and arcane."
She said her office at the alliance helps small businesses navigate the sometimes labyrinthine licensing requirements at the state and county level for free.
Any small business looking to open or wanting to check its permits can contact her office. Businesses who find themselves in violation of state regulation also can seek their assistance.
While a lot of regulation is necessary, she said when laws meant to protect workers instead result in them being laid off, as in Crescent's case, it hurts the state.
"Businesses need to go by the rules like anyone else. But if they keep making it more restrictive and increase the cost, at some point the balance sheet tells the business it's time to look elsewhere," she said.
"I hope that our state government and even our local government will take stock for a minute and stop and think about how that affects the (business) environment. When they enact some of this stuff they think it sounds good on the front end, but don't realize what will happen on the back end."
Hoogestraat speculated that the state may be purposely going after more businesses for relatively obscure licensing requirements as a way to raise money during the budget crunch.
The anonymously run Web site garmentmafia.org was started this year to chronicle the crackdown of the state labor board on small print and embroidery shops across Northern California.
The site alleges that "Northern California small-business owners are being brutalized by this state-funded bullying as we speak."
Requests for comment by the site's owner were not returned.
Stott, who filed an appeal and lost, said she would have been happy to comply with the regulation earlier had she known it existed. But she questioned its application considering how few shops in the area are licensed.
"Even though I think the requirement for embroidery is not fair, if I am going to be required to have something then it should be required that everyone who does the same type of work does as well," she said. "It needs to be a fair playing field."
More information on the garment registration certificate can be found at www.dir.ca.gov. Contact the Stanislaus County Alliance at 567-4985.
Bee staff writer Marijke Rowland can be reached at email@example.com or 578-2284.