In a long-anticipated move, and what appears to be a precursor to enforcement action, the California Attorney General has begun sending letters to retailers and manufacturers requesting proof that they comply with the California Transparency in Supply Chains Act. This unusual state law, which we have covered in detail previously, requires specific website disclosures about companies' efforts to eliminate human trafficking and slavery from their supply chains. It applies to retailers and manufacturers that have annual worldwide gross receipts of more than $100 million and that do any business in California.
The California AG has also just released a Resource Guide to assist companies in complying with the Act. Because the AG has the exclusive authority to enforce the Act, this document provides highly relevant interpretation and should prompt businesses to review their current disclosures. The AG has also established a compliance assistance website.
Companies that are in compliance will simply need to respond to the California AG's letter by filling out an on-line form and providing the addresses of their home page and web page where the required disclosures are located. Companies who believe they are not covered will need to provide information (such as tax returns) showing they are not covered by the Act.
Presumably the California AG will then target companies who are out of compliance for enforcement action. The sole remedy under this law is injunctive relief. Companies should be careful, however, to ensure that their disclosures are completely accurate because private lawsuits could be brought under false advertising laws and could seek monetary relief.
The State Attorney General's Office's effort builds on advocacy by anti-trafficking organizations who have developed a website designed to praise companies that are in compliance with the Act and publicly to identify those who are not. The California AG also issued a report on human trafficking in California in 2012. Arnold & Porter regularly advises clients on related corporate social responsibility matters and has assisted numerous retailers and manufacturers in complying with the Supply Chains Act as well as with California’s law requiring certain businesses to post public notices regarding human trafficking.