As a reminder, this new California state law takes effect on January 1, 2012 and requires retailers and manufacturers with worldwide sales of $100 million or more who do business in California (and doing business is broadly defined) to add information to their websites regarding their efforts to combat slavery and human trafficking. Whether you are directly affected and therefore taking steps to timely add the required information to your website, or you are a supplier to companies which must report under the Act and so are being asked to certify your operations, the deadline to comply is fast approaching. Are you ready?
Are you even covered by the Act? There are two important definitions to keep in mind. “’Manufacturer’ means a business entity with manufacturing as its principal business activity code, as reported on the entity’s tax return filed under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code.” “’Retail seller’ means a business entity with retail trade as its principal business activity code, as reported on the entity’s tax return filed under Part 10.2 (commencing with Section 18401) of Division 2 of the Revenue and Taxation Code.“ If you already file taxes in the State of California but do not designate your business under one of these two categories, you are outside the scope of the law as written. Having said that, it is not at all clear how the Attorney General will respond in the event he thinks the company should be reporting itself as a manufacturer or retailer. Similarly, it is unclear how the Act will be enforced against companies which merely have a presence in California, but no significant operations. Finally, in some cases, companies may decide to comply, even if not required to do so, in order to be good corporate citizens and perhaps also to avoid nosy inquiries from consumer activists and their lawyers.
To the extent you must comply or elect to do so, you will need to post information on the homepage of the company’s website (or a link to the data that appears on the home page) disclosing: (1) efforts made by the company to evaluate and address risks of human trafficking and slavery in the supply chain; (2) audits of suppliers to evaluate their compliance with the company’s standards; (3) certification by direct suppliers that they are in compliance with local laws about slavery and human trafficking in the country or countries where they do business; (4) maintenance of internal accountability standards and procedures for employees and contractors who fail to meet company standards; and (5) training for company employees and managers with direct responsibility over supply chains.
If you are in the apparel or textile industry and are looking for more details about how to comply, the California Fashion Association is presenting a one-hour webinar on December 1, 2011 at noon (PT), followed by a more in-depth Executive Breakfast Briefing at MS&K on January 19, 2012 on this new law. To register for these CFA events, contact Ilse Metchek at 213-688-6868 or info@calfashion.org. MS&K is also presenting a workshop on this same topic with the American Association of Exporters and Importers on January 10, 2012. To register for the AAEI Workshop, contact Marianne Rowden at 202) 857-8009 or mrowden@aaei.org.