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California "Human Trafficking" Law Could Require Documentation From RV Manufacturers

In 2010 California enacted a law highlighting "human trafficking and slavery in a company’s supply chain" in an attempt to regulate companies doing business in California with respect to their overseas supply chains.

This new law is broad and deep with regard to companies and their new obligation to publicly report their efforts to eradicate human trafficking and slavery in their supply chains. While the new law requires sensitive public disclosures, the true aim is to change working conditions in emerging markets that serve as supply chains to retailers and manufacturers who do business in California.

The new law takes effect on January 1, 2012 and applies to countless companies directly and indirectly.

Does Your Company Qualify?

The new law applies to retail sellers and manufacturers which have $100 million in gross worldwide sales and have any of the following:

•   the company is organized and domiciled in CA;

•   the company's sales in CA exceed the lesser of $500,000 or 25% of the company's total sales;

•   the company's personal property in CA exceeds the lesser of $50,000 or 25% of the company's total personal property; or

•   the amount of the company's compensation paid in CA exceeds the lesser of $50,000 or 25% of the company's total compensation paid.

The new law requires the California Franchise Tax Board to provide documentation to the California Attorney General of the companies that satisfy the above profile. Their first report is due November 30, 2012 and every November 30th thereafter. The Franchise Tax Board’s analysis is based on the California tax returns of companies. From initial estimates, it appears that at least 3,200 companies will be on that list.

The sole enforcement under this law is found in the Attorney General's Office and its only remedy is injunctive relief at this time. Consequently, for those companies that fail to provide proper compliance, they can be sued by the Attorney General and forced to fulfill the obligations imposed by the law.

As for those obligations, companies to which the law applies must provide a report which discloses to what extent, if any, the company does any of the following:

•   whether the company verifies its product supply chains for human trafficking and slavery, and if so they shall disclose any verification that is not conducted by a third party;

•   whether the company conducts audits of suppliers to evaluate their compliance with company standards (assuming they exist) regarding human trafficking and slavery, and if so they shall disclose any audit that is not independent and unannounced;

•   whether the company requires direct suppliers to certify that the materials they provide to make the product comply with the human trafficking and slavery laws of the countries where they are doing business;

•   whether the company maintains internal accountability mechanisms for employees or contractors regarding human trafficking and slavery; and

•   whether the company provides human trafficking and slavery training for management and employees.

That report shall be public in one of two forms, either (a) posted in a "conspicuous" fashion on the company’s Internet website, or if no such site, (b) provided within 30 days to any member of the public that requests it in writing.

If you would like more information about the new law contact Matt Wald in RVIA’s Government Affairs Department at mwald@rvia.org or (703) 620-6003 x.313. 

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