California To Enact Transparency In Supply Chain Regulations


California has put new regulations in place designed to combat slavery and human trafficking. Going into effect on January 1, 2012, the stipulations of the California Transparency in Supply Chains Act requires retailers and manufacturers doing business in the state and reporting global revenues in excess of $100 million to release information on what they’ve done to eradicate slavery and human trafficking from their direct supply chains for tangible goods offered for sale.

Through increased visibility of the supply chain, the state’s law seeks to undermine the market for goods produced, transported or otherwise stained by slavery and human trafficking. Consumers and businesses inadvertently purchasing these goods are unknowingly supporting the practice. The law is intended to inform consumers about the merits of companies’ efforts to police their supply chains.

These efforts must be posted on the company’s website with a conspicuous and easily understood link to the required information on the business’ homepage.

A company is said to “do business” in California when it:

1. Is organized or commercially domiciled in California
2. Earns sales of $500,000 or more in California
3. Or, earns 25 percent of its total sales in California

Section 23101 of the California Revenue and Taxation Code lists the cases where a company is said to “do business” in California.

Legally, companies are not required to report their policing activities. The California Transparency in Supply Chains Act only requires that a company reveal any steps has pursued to wipe out slavery and human trafficking within its supply chain.

It is possible that due to this legislation, companies not within the regulations’ scope may yet come under inspection as larger retailers and manufactures inspect their supply chains. Smaller comapanies that supply product to these larger companies may find themselves investigated as part of this process.

Review the California Transparency in Supply Chains Act for more information. To learn more about compliance best practices, PPAI members can review the PPAI Product Safety, Social And Environmental Best Practices Guide.

For further information on the California Transparency in Supply Chains Act and its requirements, a free webinar is available on October 25. Click here to learn more.

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