Yes, the US and California economies have fallen on hard times. There's no denying that everyone has been struggling, but for California screen printers and embroidery businesses you have 1 more thing to worry about. The State!

When times get tough and States need to cover their financial problems they step up enforcement of laws on the books that can generate revenue. One such law is California Code of Regulations, Title 8, Section 13630 - "Every person engaged in the business of garment manufacturing must register with the Labor Commissioner."

Technically no, you are not manufacturing the garment. BUT, you are adding value to the garment by adding embellishment and this is a form of manufacturing (at least in the eyes of California Law). The main purpose of the law is to protect migrant and legal workers. It helps ensure that workers are legal to work in this country and also prevents sweatshop conditions.

The law, in principal, levels the playing field for garment manufacturers and decorators throughout the state. In practice, it can cause a financial burden on anyone unaware of the statute. Fines are issued per employee for companies that violate the law and can quickly mount into the 10s of thousands!

1. How to Obtain a Garment Registration Certificate (official state website) - http://www.dir.ca.gov/dlse/HowToObtainGarmentRegistration.htm
2. Long post of screen printers and embroiderers talking about the law on the TShirt Forums - http://www.t-shirtforums.com/screen-printing/t77157.html
3. Tshirt Forum post about a possible change to the law - http://www.t-shirtforums.com/screen-printing/t110588.html
4. Another Tshirt Forums post talking about it - http://www.t-shirtforums.com/dye-sublimation/t63104.html