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California Transparency Supply Chain Act

SENATE BILL NO. 657
CHAPTER 556

An act to add Section 1714.43 to the Civil Code, and to add Section
19547.5 to the Revenue and Taxation Code, relating to human trafficking.
[Approved by Governor September 30, 2010. Filed with
Secretary of State September 30, 2010.]
legislative counsel’s digest
SB 657, Steinberg. Human trafficking.
The federal Victims of Trafficking and Violence Protection Act of 2000
establishes an Interagency Task Force to Monitor and Combat Trafficking,
as specified.
Existing state law makes human trafficking a crime. Existing state law
also allows a victim of human trafficking to bring a civil action for actual
damages, compensatory damages, punitive damages, injunctive relief, any
combination of those, or any other appropriate relief.
Existing law generally regulates various business activities and practices,
including those of retail sellers and manufacturers of products.
This bill would enact the California Transparency in Supply Chains Act
of 2010, and would, beginning January 1, 2012, require retail sellers and
manufacturers doing business in the state to disclose their efforts to eradicate
slavery and human trafficking from their direct supply chains for tangible
goods offered for sale, as specified. That provision would not apply to a
retail seller or manufacturer having less than $100,000,000 in annual
worldwide gross receipts. The bill would also make a specified statement
of legislative intent regarding slavery and human trafficking. The bill would
also require the Franchise Tax Board to make available to the Attorney
General a list of retail sellers and manufacturers required to disclose efforts
to eradicate slavery and human trafficking pursuant to that provision, as
specified.
The people of the State of California do enact as follows:
SECTION 1. This act shall be known, and may be cited, as the California
Transparency in Supply Chains Act of 2010.
SEC. 2. The Legislature finds and declares the following:
(a) Slavery and human trafficking are crimes under state, federal, and
international law.
(b) Slavery and human trafficking exist in every country, including the
United States, and the State of California.
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(c) As a result of the criminal natures of slavery and human trafficking,
these crimes are often hidden from view and are difficult to uncover and
track.
(d) In recent years, significant legislative efforts have been made to
capture and punish the perpetrators of these crimes.
(e) Significant legislative efforts have also been made to ensure that
victims are provided with necessary protections and rights.
(f) Legislative efforts to address the market for goods and products tainted
by slavery and trafficking have been lacking, the market being a key impetus
for these crimes.
(g) In September 2009, the United States Department of Labor released
a report required by the Trafficking Victims Protection Reauthorization
Acts of 2005 and 2008 which named 122 goods from 58 countries that are
believed to be produced by forced labor or child labor in violation of
international standards.
(h) Consumers and businesses are inadvertently promoting and
sanctioning these crimes through the purchase of goods and products that
have been tainted in the supply chain.
(i) Absent publicly available disclosures, consumers are at a disadvantage
in being able to distinguish companies on the merits of their efforts to supply
products free from the taint of slavery and trafficking. Consumers are at a
disadvantage in being able to force the eradication of slavery and trafficking
by way of their purchasing decisions.
(j) It is the policy of this state to ensure large retailers and manufacturers
provide consumers with information regarding their efforts to eradicate
slavery and human trafficking from their supply chains, to educate consumers
on how to purchase goods produced by companies that responsibly manage
their supply chains, and, thereby, to improve the lives of victims of slavery
and human trafficking.
SEC. 3. Section 1714.43 is added to the Civil Code, to read:
1714.43. (a) (1) Every retail seller and manufacturer doing business in
this state and having annual worldwide gross receipts that exceed one
hundred million dollars ($100,000,000) shall disclose, as set forth in
subdivision (c), its efforts to eradicate slavery and human trafficking from
its direct supply chain for tangible goods offered for sale.
(2) For the purposes of this section, the following definitions shall apply:
(A) “Doing business in this state” shall have the same meaning as set
forth in Section 23101 of the Revenue and Taxation Code.
(B) “Gross receipts” shall have the same meaning as set forth in Section
25120 of the Revenue and Taxation Code.
(C) “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.
(D) “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
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Ch. 556 — 2 —
10.2 (commencing with Section 18401) of Division 2 of the Revenue and
Taxation Code.
(b) The disclosure described in subdivision (a) shall be posted on the
retail seller’s or manufacturer’s Internet Web site with a conspicuous and
easily understood link to the required information placed on the business’
homepage. In the event the retail seller or manufacturer does not have an
Internet Web site, consumers shall be provided the written disclosure within
30 days of receiving a written request for the disclosure from a consumer.
(c) The disclosure described in subdivision (a) shall, at a minimum,
disclose to what extent, if any, that the retail seller or manufacturer does
each of the following:
(1) Engages in verification of product supply chains to evaluate and
address risks of human trafficking and slavery. The disclosure shall specify
if the verification was not conducted by a third party.
(2) Conducts audits of suppliers to evaluate supplier compliance with
company standards for trafficking and slavery in supply chains. The
disclosure shall specify if the verification was not an independent,
unannounced audit.
(3) Requires direct suppliers to certify that materials incorporated into
the product comply with the laws regarding slavery and human trafficking
of the country or countries in which they are doing business.
(4) Maintains internal accountability standards and procedures for
employees or contractors failing to meet company standards regarding
slavery and trafficking.
(5) Provides company employees and management, who have direct
responsibility for supply chain management, training on human trafficking
and slavery, particularly with respect to mitigating risks within the supply
chains of products.
(d) The exclusive remedy for a violation of this section shall be an action
brought by the Attorney General for injunctive relief. Nothing in this section
shall limit remedies available for a violation of any other state or federal
law.
(e) The provisions of this section shall take effect on January 1, 2012.
SEC. 4. Section 19547.5 is added to the Revenue and Taxation Code,
to read:
19547.5. (a) (1) Notwithstanding any provision of law, the Franchise
Tax Board shall make available to the Attorney General a list of retail sellers
and manufacturers required to disclose efforts to eradicate slavery and human
trafficking pursuant to Section 1714.43 of the Civil Code. The list shall be
based on tax returns filed for taxable years beginning on or after January 1,
2011.
(2) Each list required by this section shall be submitted annually to the
Attorney General by November 30, 2012, and each November 30 thereafter.
The list shall be derived from original tax returns received by the Franchise
Tax Board on or before December 31, 2011, and each December 31
thereafter.
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— 3 — Ch. 556
(b) Each annual list required by this section shall include the following
information for each retail seller or manufacturer:
(1) Entity name.
(2) California identification number.
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Ch. 556 — 4 —

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