In September 2010, the California legislature passed the California Transparency in Supply Chains Act of 2010, which went into effect Jan. 1, 2012. The California legislature’s goal in enacting this legislation was to “ensure large retailers and manufacturers provide consumers with information regarding their efforts to eradicate slavery and human trafficking from their supply chains, to educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains, and, thereby, to improve the lives of victims of slavery and human trafficking.”1
The act was passed in response to a U.S. Department of Labor report that was required by the Trafficking Victims Protection Reauthorization Act (2005 and 2008). The report named 122 goods from 58 countries that are believed to be produced by forced labor or child labor in violation of international standards. Today, that list contains 75 countries and 137 unique goods.2
Why Comply Now?
The California Department of Justice (DOJ) recently has begun conducting a compliance review of disclosures by retail sellers and manufacturers. The California DOJ has been sending retail sellers and manufacturers potentially subject to the act letters requesting documentation of each company’s compliance with the act within 30 days of the date of the communication.
Who Is Affected by the California Transparency in Supply Chains Act of 2010?
The act requires that every retail seller and manufacturer that does business in California and that has annual worldwide gross receipts totaling $100 million disclose “its efforts to eradicate slavery and human trafficking from its direct supply chain for tangible goods offered for sale.”3
What Is Required for Compliance?
The act requires retail sellers and manufacturers subject to the act to provide a disclosure on their website detailing their efforts to eradicate slavery and human trafficking in their supply chain. The disclosure must cover to what extent, if any, the retail seller or manufacturer:4
- “Engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery. The disclosure shall specify if the verification was not conducted by a third party.
- “Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains. The disclosure shall specify if the verification was not an independent, unannounced audit.
- “Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business.
- “Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking.
- “Provides 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 chains of products.”
The California DOJ has released a resource guide to assist companies in complying with the act. The guide contains recommendations for compliance and model disclosure practices.
1 California Transparency in Supply Chains Act of 2010, Cal. Civ. Code § 1714.43(2)(j) (West 2010).
2 Bureau of International Labor Affairs, List of Goods Produced by Child Labor or Forced Labor (2014).
3 California Transparency in Supply Chains Act of 2010, Cal. Civ. Code § 1714.43(3)(a)(1) (West 2010).
4 Ibid, Cal. Civ. Code § 1714.43(3)(c)(1)-(5) (West 2010).