California Anti-Slavery Law Imposes New Requirements on Retailers

Posted on October 29, 2010 by Mark Askanas

 

On September 30, 2010, California Governor Arnold Schwarzenegger signed legislation which will require retailers and manufacturers who do business in California to articulate the steps they have undertaken to eradicate slavery from the supply and distribution chain of goods they sell.

The new law, SB 657, does not go into effect until January 1, 2012.

SB 657 was sponsored by Democrat Senate President Pro Tem Darrell Steinberg. The bill was vigorously opposed by the California Chamber of Commerce and the California Grocers’ Association. While both groups emphasized that they are adamantly against slavery and abuse of workers, they cautioned that the new law will impose on companies doing business in California the obligation to monitor compliance by suppliers who are outside of the United States.

Certain countries have long been targeted by outside watch dog groups for condoning and depending on slave and child labor to produce goods which are then sold in the United States. To date, the pressure exerted has been primarily been through focusing media coverage on those companies that benefit from the lower labor costs in these oppressive countries.

The compliance obligations are unclear under the new law are unclear.  Senator Steinberg has noted that SB 657 does not require retailers to take any affirmative action to ensure products do not emanate from companies that rely on slave labor, only that they post on their website what, if anything, they are doing to eliminate slave labor from their supply chains.

However, a closer reading of the bill specifies the notice retailers are required to post on their internet site. This includes:

1.      How the retailer verifies its product supply chains to evaluate and address risks of human trafficking and slave labor.

2.      A description of the audits the retailers conduct to ensure its suppliers adhere to company standards.

3.      Certification by the retailer’s direct suppliers that materials used to make a product are from countries that do not engage in slavery and human trafficking.

4.      Maintenance of internal accountability standards for employees or contractors that fall short of the company’s requirements.

5.      Ensure that employees who are responsible for supply side management receive training on human trafficking and slavery, with a focus on the risks within supply chains.

 The bill obliquely references that the exclusive remedy for a violation of the law will be an action brought by the Attorney General for injunctive relief. However, the bill is silent as to the practical questions regarding who will enforce the law and how it will be enforced on a day to day basis. For instance, which of California’s already overburdened state government agencies will actually oversee the law’s enforcement, such as ensuring proper training and certification by suppliers

Many companies already have policies requiring vendors to warrant that they do not permit their foreign manufacturers to use slave labor. Apparently, the posting of such policies on websites will suffice if they meet the above requirements. However, one can envision an inevitable next stage where the force taken by companies will be subject to scrutiny and comparison. There is certainly a public relations aspect to SB 657, as watch dog groups will seek to “shame” companies into more stringent compliance.

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How To Defeat Class Certification (Revisited)

Posted on October 13, 2010 by Mark Askanas

Since our previous article regarding Tuesday Morning (July 23), California courts continue to acknowledge the difficulty in affording class treatment to overtime claims where there are significant differences among class members' experiences.  The ultimate questions are:  Is there commonality among the proposed class?  And if not, does the lack of commonality among the proposed class make a class action an inferior way of trying the lawsuit?   For retailers, showing a lack of commonality can be accomplished several ways, such as by showing that individual store sales volume, square footage, location, et al translate into the duties of store management varying from store to store.

Modern technology may aid this task by helping retailers focus on the individual store managers’ performance of their duties and responsibilities.  Showing a store manager spends the majority of his time performing exempt duties is a challenge for retailers in California because of the transitory nature of the retail industry.  In particular, though the assistant store manager may have job duties that would require him to spend the majority of his time performing exempt functions, the reality is that factors such as chronic absenteeism (including no calls no shows) mean that store management may often be required to unload trucks, restock shelves, work registers and recover the store. 

Computer technology gives employers the opportunity to pinpoint the exempt status of store management.  These computer based programs, often on line, can be accessed from the store’s computer.  They tend to focus on asking store management on a monthly or quarterly basis whether they are spending the majority of their time performing exempt work.  Logistical issues require that the program be relatively easy and efficient to operate.  As such, several types of programs employ a check the box questionnaire as to the frequency of the various tasks performed (e.g. as to any such activity, the questionnaire might ask how frequently the activity is performed –  “hourly”, “daily”, “weekly” – depending on the application of the law of the state at issue).  For instance, in California, the focus must be on the daily determination of exempt status, so quarterly or even weekly determinations may have little application.

As another example, an on-line management survey may require store managers and assistant store managers to evaluate and quantify time spent on managerial versus non-managerial tasks.  A key element to the success of any such survey is making the information available to regional and district managers so they store managers and assistant store managers who are not meeting the exempt requirements can be counseled.  Of course, the challenge for regional and district management is how to coach and counsel store managers in a non punitive way so that they do not respond to the surveys in a way to assuage management – that is, answer the questions the way they think they want their supervisors to answer them.

This requires a careful balancing  of the ease and practicality of the administration of the survey and the realities about conditioning people’s responses.  A constructive, coaching environment will assist in the successful implementation of an on line system.  The results of the survey can be a valuable weapon in the class certification battle.

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