In 2010, the California Legislature passed The California Transparency in Supply Chains Act of 2010 (the Act), which became effective Jan. 1, 2012. Under the Act, manufacturers and retailers of goods doing business in California with annual worldwide gross receipts over $100 million are obligated to disclose to consumers their efforts to eradicate slavery and human trafficking from their supply chains.
To comply with the Act, the required disclosure information must be posted on the retail seller’s or manufacturer’s website, with a conspicuous and easily understood link to the information from the business’ homepage. The website must disclose, at a minimum, to what extent, if any, the manufacturer or retailer engages in activities related to the following five specific categories: (1) verification; (2) supplier audits; (3) certification; (4) internal accountability; and (5) training.
On April 1, 2015, California Attorney General Kamala D. Harris issued informational letters as a result of the California Department of Justice’s recent compliance review of disclosures under the Act. The informational letters, while not a determination of compliance, are directed at companies the Attorney General believes may be subject to the Act’s disclosure requirements. The letters request a response within 30 days to provide web links to the required disclosures or information demonstrating that the company is not covered by the Act.
On April 13, 2015, the Attorney General issued a comprehensive Resource Guide in an effort to assist covered companies in complying with the Act. The Resource Guide explains each of the five above-listed topics and provides a list of related key requirements regarding the form and content of the disclosures. Model disclosures are also provided that describe the Attorney General’s recommendations and help guide businesses in developing their own disclosures.
The Resource Guide clarifies that the Act applies to companies that have taken no actions related to the five disclosure topics and reiterates the importance of complying with the Act’s requirements. The Attorney General has exclusive authority to enforce the Act and companies violating the Act could face a civil action for injunctive relief.
The recent informational letters and Resource Guide are significant steps toward California’s multi-pronged efforts to eradicate slavery and human trafficking worldwide by empowering consumers to make better and more informed purchasing choices. While the Attorney General’s recent actions are deemed “informational” in nature, a safe bet can be made that they are a portent of things to come.