Stores That Sell Clothes Made in Sweatshops Face Crackdown : Regulation: Labor Department may seek to prevent retailers from profiting from goods made under illegal conditions.

Stepping up its efforts to crack down on rampant labor abuses in the garment-manufacturing industry, the Clinton Administration is threatening legal action against major retailers that sell clothing produced in law-breaking American sweatshops.

Labor Secretary Robert B. Reich will announce today that his department is prepared to seek court orders, under the federal statute known as the “hot goods” law, to prevent retailers from selling goods manufactured under conditions that violate labor laws.

The move is intended to curb what government investigators claim is a chilling trend: the return of the type of abuse-ridden sweatshops found in the garment industry at the turn of the century, a problem particularly severe in Southern California.

A study by state and federal authorities released in April found chronic abuses by California garment makers, including cases of bosses locking fire exits, children as young as 13 working nine-hour days, and workers receiving pay far below the $4.25-an-hour federal minimum wage.

Yet authorities have been thwarted in efforts to combat the problem, largely because the worst abuses often occur at small sewing contractors that simply shut down and set up for business under a new name when investigators bear down on them.

Federal labor officials in California began to strike back by taking aim at big garment manufacturers that hire law-breaking sewing contractors. To that end, they dusted off the little-used 1938 hot-goods statute, which bars interstate transport of goods made at companies breaking labor law.

In a major precedent in 1992, the Labor Department investigated Guess Inc., Southern California’s biggest apparel firm, under the statute and extracted an agreement making the company responsible for its contractors’ labor practices.

The plans to be announced by Reich today step up that program by striking at big retailers along with the manufacturers and by expanding the hot-goods initiative outside California to other apparel-making centers of the country. One source said Reich may disclose the name of a major retailer already in talks with federal officials to work with the government in connection with the hot-goods program.

Industry groups, however, are expected to oppose their government initiatives. In California, industry opposition led to previous defeats of proposed state legislation to make manufacturers liable for labor law violations committed by their contractors.

A scaled-down version of the proposal was approved by the Legislature again this year, but Gov. Pete Wilson has not indicated whether he will sign it into law.

Garment industry abuses are are widespread in other parts of the country as well. A General Accounting Office study estimated that nearly two-thirds of the garment shops in New York City are violating the law.

Another target of the department’s new enforcement effort is the growing number of apparel contractors that hire people to sew at home, paying them a piecework rate that is well below minimum wage. Federal labor laws prohibit such industrial work at home.

“We have two strategies,” Reich said in an interview Thursday. The first, he said, is to get retailers to better police their manufacturers by using the hot-goods provision of the Fair Labor Standards Act to block shipments from the manufacturer to the retailer. That provision allows the government to seek restraining orders prohibiting the shipment of illegal goods.

The second strategy, Reich said, would be to use the same clause to seek court injunctions to prevent retailers from selling any illegally produced goods they may have received. This will be the first time the federal government has taken this approach in the courts. He said that once a retailer has been warned about illegal manufacturers, it will be liable under the law.

The government hopes that retailers will put pressure on their suppliers to ensure that the goods are manufactured legally. Labor Department officials said the program would encourage retailers and manufacturers to hire their own investigators to monitor subcontractors closely. It will also be up to the retailer to monitor the government’s list of violators as well.

“The whole purpose of this is to leverage scarce enforcement resources by getting large retailers to take greater responsibility for the conditions under which the garments they sell are produced,” Reich said.

John Dill, senior vice president for government affairs at the National Retail Federation, said he was not familiar with the Labor Department effort and could not comment. The federation represents most of the major retailers being targeted by the department.

The Labor Department estimates that while there are fewer than 1,000 major manufacturers in the U.S. apparel industry, there are 22,000 cutting and sewing shops that do subcontracting work. The department has 800 wage and hour inspectors nationwide.