If your business has global gross receipts of $100,000,000 or more, or if you supply product to a business that does, this act affects you beginning January 1, 2012. The ostensible purpose of the Act is to provide information to consumers to help them determine if products they purchase are “tainted” by human trafficking or slavery, since “the market [is] a key impetus for these crimes.” The new mandatory disclosures as outlined below are designed to help “eradicate slavery and human trafficking from…direct supply chains for tangible goods offered for sale…in California.”
The California Transparency in Supply Chains Act of 2010, codified as California Civil Code Section 1714.43 and effective January 1, 2012, applies to retail sellers and manufacturers of products doing business in California. The Act requires such businesses to place, on their “Internet Web site” home page, a “conspicuous and easily understood link” to a disclosure of what, if anything, the retailer or manufacturer does with respect to each of the following:
- "Verification” of its “product supply chains” to evaluate and address risks of “human trafficking and slavery.” The verification shall disclose if it was not “conducted by a third party.”
- Conducting audits of suppliers to evaluate supplier compliance with company standards for “trafficking and slavery in supply chains.” The disclosure shall, again, disclose if it was not conducted by a third party.
- Requiring “direct suppliers” [a phrase not defined by the Act] to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking in the country or countries in which they do business.
- Maintaining “internal accountability standards and procedures” for employees and contractors that fail to meet company standards with respect to human trafficking and slavery.
- Providing company employees and management “who have direct responsibility for supply chain management” training on human trafficking and slavery, “particularly with respect to mitigating risks within the supply chain of products.”
The exclusive remedy for a violation of the Act is an action by the Attorney General for injunctive relief. The Act assumes that those affected have “company standards for trafficking and slavery in supply chains.” Because the Act does not expressly state that it does not limit remedies for violations of any other state in federal law, it may allow others to seek damages and attorneys fees under other laws such as the California Unfair Competition Law and The Consumer Legal Remedies Act for failure to comply.
The Act does not require affected companies to actually do anything about slavery or human trafficking in their supply chains, only to report what they do or don’t do so that consumers have such information to make informed purchasing decisions.
Companies with less than $100,000,000 in global “gross receipts” are likely to be ultimately affected by the act if they are part of the “supply chain” of any retailer or entity having more than $100,000,000 in global gross receipts. If such smaller suppliers are part of the supply chain, the large retail or manufacturing customer is likely to require certification and audits of those suppliers, which would require the smaller supply chain participants to seek and obtain such information from their respective suppliers.
This document is intended to provide you with general information about manufacturing and retail law developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact Kevin Crisp at 213.542.8019 or kcrisp@hbblaw.com, or contact your preferred Haight Brown & Bonesteel, LLP attorney. This communication may be considered advertising in some jurisdictions.