Bringing the state into line with the rest of the country as well as with federal regulations, California Governor Jerry Brown signed a bill into law relaxing the labeling requirements for products carrying the "Made in America" or "Made in USA" labels in the state.

Previously, state regulations mandated 100 percent American production for manufacturers to use the "country of" designation on their labels, a standard that resulted in a wave of class action litigation challenging companies over slight percentages of non-American ingredients.

Senate Bill 633 was introduced in response and was passed by the Senate in May and the Assembly in July. The measure amends the Business and Professions Code Section 17533.7 to state: "It is unlawful for any person, firm, corporation, or association to sell or offer for sale in this state any merchandise on which merchandise or on its container there appears the words 'Made in U.S.A.,' 'Made in America,' 'U.S.A.,' or similar words if the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States."

The new law "shall not apply to merchandise made, manufactured, or produced in the United States that has one or more articles, units, or parts from outside of the United States, if all of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 5 percent of the final wholesale value of the manufactured product."

In addition, the label prohibition will not apply if the manufacturer "shows that it can neither produce the article, unit, or part within the United States nor obtain the article, unit, or part of the merchandise from a domestic source," and "[a]ll of the articles, units, or parts of the merchandise obtained from outside the United States constitute not more than 10 percent of the final wholesale value of the manufactured product."

The new law aligns California with the rest of the country as well as the Federal Trade Commission standard that "all, or virtually all" of a product must be made in the country for a "Made in" label to be lawfully used.

To read SB 633, click here.

Why it matters: Lawmakers pushed for the bill by arguing that California needed the regulatory tweak to compete with other states and help businesses thrive in a global economy. A potential decrease in consumer class actions certainly didn't hurt the legislation's passage, either. Whatever the motivation, the new law will ease the burden on California manufacturers seeking to use a "Made in the USA" label.