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by Karmah Elmusa

November 2012

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Big companies that have yet to comply with California's new efforts to expose human rights and labor violations are scrambling to get their affairs in order before the attorney general's office is notified this month of possible violators.

Since the first of the year, the California Transparency in Supply Chains Act of 2010 (TISCA) (SB 657) has required large retailers and manufactures that do business in California to post their policies to eradicate slavery and human trafficking from their supply chain on the homepage of their company websites. The law applies to businesses with annual worldwide gross earnings of more than $100 million. (See section 1714.43 of the California Civil Code and section 19547.5 of the state's Revenue and Taxation Code.)

Enforcement of the law depends on the state seeking injunctions against noncompliers, and on November 30 the Franchise Tax Board will supply the attorney general's office with a list of businesses that should currently be in compliance with TISCA, based on 2011 returns. The attorney general's office declined to comment on its enforcement plans, but Anthony Pacheco, a partner at Jeffer Mangels Butler & Mitchell, advises companies to take the statute seriously.

"This is not the type of law that a company would want to bet wrongly that the AG will not enforce," Pacheco says, "risking the impression, made very public by a lawsuit, that the company has something to hide."

Many that will be listed, such as Patagonia and Gap, already display their policies online. Other companies have only begun seeking legal advice about compliance. Remsen Kinne IV of K&L Gates says they are fielding questions such as, "What is the distinction between a direct and an indirect supply chain?"

Senate President Pro Tem Darrell Steinberg, who authored the legislation, says that many companies are already on board. Now, he hopes the law will have its intended effect. "Information is power," he says. "By gaining a clearer view of what large retailers and manufacturers are doing to eliminate slavery and human trafficking from their supply chains, consumers and investors can ...[flex] their economic muscle to reward responsible corporate behavior."

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