New California Law Takes Aim At Forced Labor

By Ed Mattos, International Labor Rights Forum

Two months ago the California Transparency in Supply Chains Act of 2010 [CATSCA] took effect.  Following a nearly three-year effort, the bill known as SB 657 was passed by the California legislature and signed into law by then Governor Arnold Schwarzenegger in 2010.  Beginning on January 1st of this year, any retail or manufacturing company doing business in California which has annual worldwide gross receipts of $100 million or more must comply with terms of the new law.

Affected companies must post on their websites a notice regarding slavery and human trafficking in their supply chains.  There are five issues which must be addressed in the posting:

1. The extent to which they engage third-party verification of their supply chains to evaluate and address the risk of human trafficking and slavery.
2. Whether independent and unannounced compliance audits are conducted with their suppliers.
3. Whether they require suppliers to certify that raw materials comply with slavery and trafficking laws of the country of origin.
4. If there are internal accountability standards and procedures for employees and contractors who do not comply with company policy on slavery and human trafficking.
5. Whether there is training provided to employees and managers regarding slavery and human trafficking within their specific industry.

In the unlikely event that an affected business has no website, it must provide a written statement within thirty days of a request.  The statement also must address these five points. The state Attorney General may seek an injunction seeking compliance against those companies which do not comply with CATSCA.  There is, at this time, no other sanction under the law.  Other monitoring and compliance procedures are as yet unclear.

California State Senator Darrell Steinberg was the principal author of the bill, which was co-authored by State Assembly Speaker John A. Perez.  Additional co-authors were State Assembly members Julia Brownley and Lori Saldana.  Steinberg first introduced the bill in 2008 as SB 1649.  When that bill, which required a broad set of companies to have in place a very specific policy on slavery and trafficking, did not receive final legislative approval, he reintroduced the language in the subsequent session as SB 657.  That measure eventually turned into the CATSCA and was signed into law by Governor Schwarzenegger on September 30, 2010.

California is widely known to be a favored destination for human traffickers and so there is substantial sensitivity to the issue there. 

Sen. Steinberg had been approached by actress Julia Ormond in 2007.   Ormond had recently founded the Alliance to Stop Slavery and End Trafficking [ASSET] and received funding from the Clinton Global Initiative.  ASSET was working on the 2008 reauthorization of the federal Trafficking Victims Protection Act [TVPA] of 2000.  Ms. Ormond approached Sen. Steinberg, who was Senate President pro tem, about sponsoring anti-slavery and trafficking legislation in the California legislature.  Several California labor, consumer, and other organizations supported the bill including ASSET, the Coalition to Abolish Slavery and Trafficking [CAST], the Consumer Federation of California [CFC], Planned Parenthood, California Labor Federation, and others.  The opposition to the bill was led by a coalition of business groups, including the California Chamber of Commerce, the California Manufacturers and Technology Association, the National Federation of Independent Business, the California Retailers Association, the California Independent Grocers Association, and the Grocery Manufacturers Association.  Opponents, of course, were not advocates of trafficking or slavery.  Among their arguments was that policing such practices are not within the scope of what businesses can reasonably do.

Following the 2009 legislative session, with SB 657 now in the Assembly, Steinberg held a hearing in Los Angeles in December.  Its purpose was to raise awareness of the issues which SB 657 addressed.  Among those testifying at the hearing were labor leaders and victims of forced labor.  The hearing provided some momentum for the bill which, eight months later, passed the assembly and returned to the Senate where it passed on August 30, 2010.

Since its passage, the law has provided for much discussion of its impact, particularly within the legal profession.  Compliance training is being offered by many organizations.  The supply chains of manufacturers of autos, medical supplies, apparel and other products are subject to the requirements of the law, as are many restaurant and grocery chains.   There has been speculation about the law’s impact on the labor practices of key offshore manufacturers and suppliers, especially those in Asia.  One attorney wrote that:

“Companies should note that, even if they are not required to comply with S.B. 657, if they supply goods to retail sellers or manufacturers that are subject to the law, they will likely be called upon to provide certifications to their customers about their own efforts to ensure the goods they supply are not produced by victims of human trafficking or slavery. That would likely require contacting the next tier of suppliers to obtain certifications from them as well.”

On the federal level Rep. Carolyn B. Maloney of New York introduced HR 2759 in the US House of Representatives on August 1, 2011.  Named the Business Transparency on Trafficking and Slavery Act, it is co-sponsored by Reps. Jackie Speier [D-CA], Christopher Smith (R-NJ), and Jim McGovern (D-MA).  Maloney and Smith co-chair the Congressional Human Trafficking Caucus.  The bill would require publicly traded companies with worldwide annual sales of $100 million to include information on company policy regarding slavery and human trafficking in their annual reports to the Securities and Exchange Commission.  HR 2759 has been referred to the House Financial Services Committee and its Subcommittee on Capital Markets and Government Sponsored Enterprises.   There is evidence that other states – and even countries – are considering duplicating the California law.  The anti-slavery Polaris Project has a list of legislative initiatives on its website.

CATSCA is an initial legislative step in the formidable task of eradicating slavery and forced labor.  It is an example of a “doing what’s possible” strategy.  The law requires rather little from the business community yet much from the consuming public, as well as from anti-slavery and human trafficking activists.

With the minimal requirements of reporting and training and the minor sanction against non-compliant businesses, CATSCA does little, in and of itself, to halt forced labor practices.  It does, however, represent a tool that consumers and activists must use in an effort to strengthen the law in the future.  There must be consumer demand that retailers and manufacturers not simply report and train, but actively work to eradicate slave labor practices from tainting their products.  It is unfortunate that the law does not require that statements of policy be posted in stores or offices.  Also, it remains to be seen whether affected businesses will try to form subsidiaries or entities whose revenues will fall below the threshold for compliance.

Much of the effectiveness of the law will depend upon the quality of third-party inspections and investigations.  If inspectors are timid or dishonest, their findings will not be reliable.  Unless there is quality control of third party inspections, companies will be able to report results that are inaccurate.

Furthermore, inspections will be dangerous and therefore expensive, if done properly.  As time passes, demand for properly executed inspections will almost certainly be met with considerable resistance from the business community.  Additionally, human enslavement is illegal and so it is conducted by criminals whose reaction to efforts to stop their profitable enterprise will not be polite.  Given the weakness of governments in the slave-supplying nations, the security of inspectors and well-intentioned officials will be tenuous. 

Looming large is the demand for forced labor that enables the traffickers to profit from supplying it.  The question then becomes: what is the ultimate source of this demand?  The answer to that question is where the rubber meets the road. The culture that has allowed slavery and human trafficking to continue for centuries is an enormous factor in the equation as well.

A practical response to the issues of slavery and human trafficking which is underway in Brazil has been identified as a “best practice”.  It involves NGOs and a news-gathering organization working in cooperation with the Brazilian government to uncover suspected trafficking or forced labor, effect government intervention, and publicize the involvement of up-chain businesses.

Born of the efforts of activists, the California Transparency in Supply Chains Act places the issues of slavery and human trafficking under a spotlight.  The glare from that spotlight will be seen all over the world because of the pivotal role to be played by the internet.  It is the responsibility of consumers and activists to increase the pressure on business and government to take decisive action to bring a halt to abusive labor practices.  The extent to which progress is made on ending forced labor and human trafficking depends upon the degree to which such pressure is brought to bear.

Comments

[Toronto Immigration Lawyers]

Dillon dug deeper and asked to see their documents. He warned the young women they likely were about to be trafficked into the sex trade or sweatshops.