Recently, a number of large retail and manufacturing companies doing business in California may have been surprised to receive a letter from the California Attorney General asking them to demonstrate compliance with the California Transparency in Supply Chains Act.
Executive Summary: Recently, a number of large retail and manufacturing companies doing business in California may have been surprised to receive a letter from the California Attorney General asking them to demonstrate compliance with the California Transparency in Supply Chains Act. The Act was enacted in 2010 and became effective in 2012; however, the recent round of letters sent out by the California Attorney General has focused more attention on the Act. Recipients of the letters have 30 days to respond by providing a link to their disclosure or providing information showing they are not covered by the Act.
Provisions of the Act
The Act applies to retailers and manufacturers doing business in California who have world-wide gross receipts that exceed $100 million. It requires companies to disclose the extent, if any, to which the company has taken specific actions to eradicate slavery and human trafficking in their supply chains, including to what extent it:
- engages in verification of its product supply chains to evaluate and address human trafficking;
- conducts audits of suppliers to evaluate compliance with company standards regarding trafficking and slavery;
- requires direct suppliers to certify that materials incorporated in their product comply with laws regarding slavery and human trafficking of the countries in which they do business;
- maintains internal accountability standards and procedures for employees or contractors that do not meet the company's standards regarding human trafficking and slavery; and
- provides training on human trafficking and slavery to employees and management with direct responsibility for supply chain management.
The disclosure must be posted on the company's website with a conspicuous and easily understood link to the required information on the home page of the site. If a company does not have a website, it must provide a written disclosure within 30 days of receiving a consumer's written request for the disclosure.
Even if a company has not made any efforts in these areas, it must disclose that it has taken no action. The Attorney General can seek injunctive relief against companies that do not comply with the Act's disclosure requirements.
Resource Guide
The Attorney General has published a resource guide to the Act, which provides recommendations about model disclosures and best practices for developing such disclosures. The Resource Guide is available at: http://oag.ca.gov/sites/all/files/agweb/pdfs/sb657/resource-guide.pdf.
If you have any questions about the Act or other labor or employment laws affecting California employers, please contact David Cheng, dcheng@fordharrison.com, who is a senior associate in our Los Angeles office. You may also contact the FordHarrison attorney with whom you usually work.