Companies with connections to California should be aware of a new law that became effective in 2012, called California's Transparency in Supply Chains Act ("Act"). Any business subject to the Act must provide a notice as part of a publically-available website that explains what the business has done, if anything, to eliminate forced labor and human trafficking from its supply chain.
The Act applies to businesses engaged in retail sales or manufacturing in California, whose annual worldwide sales amount to $100 million. If a company is subject to the Act, then the California Franchise Tax Board will forward its name to the California Attorney General's office by November 30, 2012. California's Attorney General is required to enforce the Act by filing court actions against businesses that do not comply. The Act is the first of its kind in the United States and will affect a number of large manufacturers and retailers.
Under the Act, a company must disclose to consumers whether or not the company: (1) verifies the risk of forced labor and human trafficking in their own supply chains, (2) audits its suppliers for similar concerns, (3) requires its direct suppliers to certify that materials supplied are free of forced labor and human trafficking, (4) maintains internal accountability for monitoring forced labor and human trafficking in its supply chains, and (5) provides training to employees on methods to minimize forced labor and human trafficking in its supply chains.