California's Transparency in Supply Chains Act of 2010 (the Act) requires companies to publicly disclose their efforts to combat slavery and human trafficking in their business supply chains. The Act, which becomes effective Jan. 1, 2012, requires large companies doing business in California to post on their websites links to their anti-human trafficking policies, to enable consumers to make more informed purchasing decisions. While the Act does not mandate any required policies or their content, it does require that the policies (or lack of policies) be disclosed via a link available on the company's homepage.
The Act enables the attorney general of California to pursue injunctive relief but does not bar consumers or others from seeking available remedies for violations of other state or federal laws such as false advertising or misrepresentation. Accordingly, any policies posted in accordance with the Act must be accurate. The pertinent provisions and definitions of the Act are briefly summarized below.
Every retail seller and manufacturer doing business in California and having annual worldwide gross receipts that exceed $100 million shall disclose its efforts to eradicate slavery and human trafficking from its direct supply chain for tangible goods offered for sale. Doing business in the state is broadly defined as meeting any of the following:
- the company is organized or commercially domiciled in California;
- sales exceed the lesser of $500,000 or 25 percent of the company's total sales, including sales by an agent or independent contractor;
- real property and tangible personal property in California exceed the lesser of $50,000 or 25 percent of its total real property and tangible personal property; or
- the amount paid in California for compensation, as defined in subdivision (c) of Section 25120, exceeds the lesser of $50,000 or 25 percent of the total compensation paid by the taxpayer.
At a minimum, the retail seller or manufacturer must disclose to what extent, if any, it does each of the following:
- engages in verification of product supply chains to evaluate and address risks of human trafficking and slavery and whether the verification is conducted by a third party;
- conducts audits to evaluate supplier compliance with company standards for trafficking and slavery in supply chains and whether verification was not an independent, unannounced audit;
- requires direct suppliers to certify that materials incorporated into products 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; and
- 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.
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