California Anti-Slavery Law Imposes New Requirements on Retailers
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.
